PRIVATE BUSINESS
	 — 
	DEATH OF CHRISTOPHER ALDER

Resolved,
	That an Humble Address be presented to Her Majesty, that she will be graciously pleased to give directions that there be laid before this House a Return of the Report dated 27th February 2006 of the Review by the Independent Police Complaints Commission into the events leading up to and following the death of Christopher Alder on 1st April 1998.—[Mr. Alan Campbell.]

Oral Answers to Questions

DEFENCE

The Secretary of State was asked—

Joint Strike Fighter

Peter Bone: What progress has been made in discussions with the United States about the joint strike fighter.

Adam Ingram: We continue to make good progress with the US to ensure that the UK's military and industrial requirements for the joint strike fighter programme will be met. In the past 10 days, there have been no fewer than three meetings on those very issues with the Senate Committee on Armed Services, involving the Secretary of State and my noble Friend Lord Drayson, the Minister for Defence Procurement; one took place in Washington and two in London. Following those discussions, we remain optimistic that we will be in a position to sign a production, sustainment and follow-on development memorandum of understanding in December, as planned.

Peter Bone: Does the Minister really believe that the joint strike fighter will ever enter service? If so, when will it do so, and by how much will it be over budget?

Adam Ingram: Yes, I do, and it will be on programme.

Lindsay Hoyle: Of course my right hon. Friend is aware of the need to ensure that the contract goes ahead, but as part of that contract we need to see final assembly for the north-west and full heavy maintenance in the United Kingdom. Those are the reassurances that we need, as well as the hope of a short take-off and vertical landing version of the joint strike fighter. Can my right hon. Friend enlighten the House on what progress has been made?

Adam Ingram: I would love to be able to enlighten my hon. Friend, but no final decisions have yet been made on the points that he raises.

Michael Jack: On the basis of a briefing that I received from our embassy in Washington, may I record my appreciation for what Lord Drayson has done by way of representation on Capitol Hill?
	While the Minister pursues his objective of ensuring that the memorandum of understanding is signed in November, what steps are being taken to bring the armed forces committee and the House of Representatives on side? They appear still to be the ultimate logjam.

Adam Ingram: I know that the right hon. Gentleman has taken a close interest in the matter, and that senior members of his party were present during the representations made in Washington. All the representations are being made as strenuously, as pointedly and, I believe, as constructively as we can make them. Every effort will be made to ensure that that continues, and I know that the right hon. Gentleman will take the opportunity to express his view to those in Washington with whom he is in contact.

Sarah McCarthy-Fry: Does the Minister agree that the decision by the United States to cancel the development and construction of the second engine, apart from delivering a blow to British jobs, was shortsighted? In creating competition by developing two engines, we could have driven down costs in the whole project and secured a better engine design.

Adam Ingram: That was an important part of our earlier approach, and we still believe that it would confer added enhancement and benefits to the programme. We will continue to make that view known. It was raised when my noble Friend Lord Drayson met the US Senate Committee on Armed Services about 10 days ago, and we continue to raise it, along with all the other representations that we make about the need for transfer of the technology.

Nick Harvey: I commend the robust attitude that Ministers are taking on the issue of technology transfer, but may I ask how much money has been spent on the programme so far, and what conditions were established at the outset in relation to technology transfer? Clearly we are talking about huge sums, and I presume that the Government must have included some guarantees in the original agreement that they negotiated.

Adam Ingram: I do not have the precise figure to date, but I can say from memory that it is about $1 billion. I will write to the hon. Gentleman with a more up-to-date figure.
	The other issue that has been raised is "Government to Government". We have very good relations with the United States Administration, although obviously we have differences with them as well, and express ourselves forcefully when those differences arise. When agreements are reached, they are reached by two mutual and close partners. I do not see the worries that the hon. Gentleman is trying to raise. I know that there is a bit of anti-Americanism in certain parts of politics today; I think that that is to be regretted, and that it detracts from what we are seeking to do.

Liam Fox: I am sure that the Minister would agree that the JSF is the best aircraft for the roles that are currently envisaged, and that defence technology transfer should not be an issue, given theintelligence co-operation and nuclear weapon technology exchange between the UK and the US. Does he also agree that failure could drive the UK into further European procurement that is not, in this instance, in the strategic interests of either the UK or the United States?
	Does the Minister understand the fears of the United States about the leakage of defence technology? Would he care to reflect on the damage done by today's news that 41 German companies are being investigated over sales of equipment and technology to Iran for potential use in its nuclear programme, and the impact that that will have on Capitol Hill?

Adam Ingram: I thank the hon. Gentleman for his efforts, particularly during his visit to Washington, in trying to ensure that we do what is required to take this programme forward. We have made it clear that we want to win the contract on the proposed basis and we are making every effort to achieve that. The US Administration—and, indeed, beyond that—well understand the strength of our case, but it does not help to point out that other nations are allegedly involved in things that they should not be doing, as such a claim has been the basis of press reports. Clearly, there are some concerns within the US about this matter. As I said in my earlier answer to the hon. Member for North Devon (Nick Harvey), the issue will be settled on the basis of the good relationship that exists between very close allies and partners. If we strike the deal that we want, I am sure that every aspect will be honoured on both sides of the relationship.

Veterans Badge

Iain Wright: What progress he has made with his plans for the veterans badge now that the one year trial period has come to an end.

Don Touhig: I can confirm that, following the trial, which proved its popularity, we will continue to issue the veterans badge to service leavers. I can also tell the House that more than 200,000 badges have been issued to date and eligibility to apply will be extended to all qualifying veterans as soon as it is practicable to do so, so that all generations can have the privilege and honour of wearing it.

Iain Wright: Of all the issues that I have dealt with during my time in the House the veterans badge has had the greatest impact in respect of take-up among constituents—and rightly so. Will the Minister expand on his answer and tell us what plans he has to extend the scope of the badge to other campaigns—perhaps to include widows of veterans, too?

Don Touhig: My right hon. Friend the Secretary of State for Defence announced on 13 February that we will extend eligibility to veterans who served in our forces up to 31 December 1959. They are now able to apply for the veterans badge. I can tell my hon. Friend that those eligible to apply for it are members of the armed forces, the merchant navy, the Home Guard, the Polish forces and the UK command in the Cyprus Regiment. The badge can also be awarded posthumously to widows who are in receipt of a service pension. I have letters almost every day from people across the country who are hugely grateful for the opportunity to wear the badge. It was a fantastic idea that has been a huge success and it demonstrates how much the whole House and the whole nation value our veterans.

John Randall: While I recognise that, is not the present position unfair to people who served the country during the last war, but who were precluded from joining the armed forces because they had to work in reserved industries and other such areas? If it is inappropriate to give them a veterans badge, does not the Minister believe that something should be done to reward people who served their country well, but not necessarily in the armed forces?

Don Touhig: Our success in prosecuting and winning the last war was the result of the whole nation's efforts, and I am sure that the whole House recognises that. Our responsibilities, however, relate to those who served in His Majesty's armed forces at the time. That is why the veterans badge is awarded in the way that it is. I am aware of the contribution of the Bevin boys, the land army and others and I understand that some people believe that they should also qualify—a matter for my ministerial colleagues in other Departments as well as me—but I certainly share the sentiment behind the hon. Gentleman's point.

Royal Regiment of Scotland (Kilts)

James McGovern: What guidelines he has laid down for the procurement of the tartan material required for the production of the new Royal Regiment of Scotland kilts.

Adam Ingram: Procurement of kilts for the Royal Regiment of Scotland will be carried out under public procurement regulations, which are applicable under United Kingdom and European Union law. Sourcing the tartan will be the responsibility of the successful bidder. Award of the contract for the kilts will be based on a thorough assessment of quality and technical standards as defined by the user, as well as on cost in order to ensure best value for money for the taxpayer.

James McGovern: I thank the Minister for his response and for the correspondence that he sent me on this matter. However, there remains considerable concern in Scotland that the new tartan might well be manufactured outwith Scotland, possibly in eastern Europe. On this, the very day before the official formation of the new Royal Regiment of Scotland, will the Minister assure the House that, just as Jersey potatoes must come from Jersey and Newcastle brown ale from Newcastle, the new Scottish tartan for the new Scottish regiment will be manufactured in Scotland?

Adam Ingram: I know that my hon. Friend is trying valiantly on this issue, but we are constrained by European regulation. [Interruption.] Perhaps I should explain that the current prime contractor for the kilts is based in England.

James Gray: I am astonished by the Minister's last remark. My understanding is that the firm of John Noble and Co., in Peebles, has made the kilt for the British Army in Scotland since the late 18th century, and that the contract is for 5,000 kilts at a cost of £300,000. The Minister must appreciate that the Scottish soldier's kilt has always been made in Scotland. It is made there now by John Noble and Co., and surely the Minister can see that both its weaving and manufacture should continue to be done in Scotland.

Adam Ingram: On a point of accuracy, Robert Noble and Co. makes the tartan, the prime contractor is a Yorkshire-based company and a company in Alexandria manufactures the kilts. The contract, which is a £1 million contract for 5,000 kilts, will go out to tender. There will be a repeat contract for 300 kilts each year. The material in question is not being changed; it is already in use. We are simply standardising the use of a material that used to apply only to certain officers throughout all the ranks.

Gordon Prentice: Army kit that used to be made in Lancashire is now being made in China. It is simply unacceptable for the tartan for Scottish kilts to be sourced from Shanghai or any place in eastern Europe, as my hon. Friend the Member for Dundee, West (Mr. McGovern) suggests.

Adam Ingram: I do not know whether that was a question. There were a number of bidders for the contract to which my hon. Friend refers and, from memory, they all outsourced outside the United Kingdom for the material and its manufacturing. Indeed, the company that previously had responsibility for the manufacture of the uniform in question—it was one of the two main competitors in the bid—was also seeking to outsource in China.

Housing

Nadine Dorries: If he will make a statement on the housing needs of former servicemen and women and their families.

Don Touhig: We recognise that many service personnel and their families need assistance with, and advice on, housing matters. Through the Joint Service Housing Advice Office, we provide comprehensive advice on housing options and, in some cases, assistance with housing placement where personnel are about to return to civilian life. In addition, we work closely with the Office of the Deputy Prime Minister, ex-service charities and other specialist services to help identify those who might be at risk of homelessness.

Nadine Dorries: The situation that servicemen and women find themselves in before discharge has been highlighted by my serving constituent, Mr. Nick Cowan. Housing associations are able to step in only when such people are officially declared homeless—28 days before discharge—and charities are left to pick up the pieces. The JSHAO to which the Minister just referred provides only advice, not, as he stated, assistance. Is this the way to repay loyal servicemen and women?

Don Touhig: I am of course familiar with the case that the hon. Lady mentions; she has corresponded with me about it and I have answered some of her questions. I do not doubt her commitment to her constituent and the hard work that she has done on this issue, but I suggest that she look at her website, on which she says that one of her priorities is opposing the Government's "damaging" house building plans. Well, we have to have houses to house people in the first place; nevertheless, she makes an important point. [Interruption.] If the hon. Lady will listen, I will give an answer. We have been working across the board to try to deal with these issues but, as she knows, questions of housing priority are often a matter for local housing authorities. The council in the area represented by my right hon. Friend the Minister of State gives housing priority to those who have served in the armed forces, and I urge councils throughout the country to think on that.

Mark Harper: When a member of the armed forces is discharged and is looking for a roof over their head, they are at a disadvantage in gaining access to social housing. No matter how long they have been based in a particular area, their residence does not establish a local connection in the eyes of many councils, although there are honourable exceptions. Effectively, such people are treated in the same way as those who are resident in prisons. Why, in the light of the Minister's concerns, have Ministers from the Ministry of Defence and the Office of the Deputy Prime Minister not met to discuss the local housing connection?

Don Touhig: I can tell the hon. Gentleman that we have ongoing discussions with the Office of the Deputy Prime Minister so that we can overcome some of the problems, but as I pointed out a moment ago the allocation of priority housing is a matter for local housing authorities. When I was a young councillor in my 20s, my council gave priority housing to key workers and those who had served in our forces. We understand the problems experienced by those who have served in our forces as they move into civilian life and we do everything possible to make sure that the transition is smooth. We give every support that we possibly can, but often people want to be housed in an area to which the local authority feels that they have no particular links or connection so they do not receive priority. We shall do all that we can to bring the matter to the attention of the Local Government Association and others. At present, the LGA is run by a member of the hon. Gentleman's party, so he might care to make representations to the association to urge local authorities across Britain to give priority to our ex-servicemen and women who apply for housing.

Afghanistan

Anne McIntosh: If he will make a statement on the deployment of troops to Afghanistan.

John Reid: I offer my condolences to the family and friends of Corporal Mark Cridge who died last week in Afghanistan. I have today learned of another fatality in Afghanistan, believed to be a road traffic accident and my thoughts are also with his family and friends—as, I am sure, are the thoughts of the whole House.
	We are in Afghanistan under United Nations Security Council resolution 1623 and at the invitation of the democratically elected Government to prevent that country from ever again reverting to being a haven for terrorists, by helping the Afghan people build their own democracy, security and legitimate economy.

Anne McIntosh: I join the Secretary of State in expressing my condolences to the bereaved and their loved ones.
	Does the Secretary of State agree that the developments pose further questions about the security of the theatre where UK service personnel are based? Why did he write to me on 27 February to tell me that no one was being deployed from the Vale of York, yet I have learned subsequently that 215 personnel from one base in the Vale of York are going to Afghanistan and that a number from another base who were supposed to go there are being redirected to Iraq? Does not that pose serious questions about the Ministry of Defence's knowledge of what is going on and who is currently being deployed to Afghanistan?

John Reid: First, I thank the hon. Lady for her shared condolences for Corporal Cridge and his family and the family of the second deceased to whom I referred.
	We are in Afghanistan for a clear reason: to assist the people of Afghanistan to build their own democracy, security and economy, thereby preventing the country from falling back under the heel of the Taliban and the terrorists, since it was from there that the worst-ever terrorist atrocity was launched. I fully accept that it is more dangerous in the south than anywhere else where we have been present hitherto, but whatever the dangers, they are less than the danger of the Taliban and the terrorists taking over Afghanistan again, which would be a danger to not only our forces but the people of that country.
	I apologise if I have given the hon. Lady wrong information and will check immediately after Question Time and write to her again. From memory, I am not aware of the specific details of the letter, but I shall check the position and rectify it as necessary.

James Arbuthnot: As the Secretary of State has told the Select Committee on Defence, if British troops in Afghanistan take people into detention, it is the Government's policy that they be handed over to the Afghan authorities. Is it the Secretary of State's understanding that the United Kingdom maintains a duty of care for such people even after they have been handed to the Afghan authorities?

John Reid: Obviously, the British authorities' duty of care is primarily while people are in their custody, which is, as the right hon. Gentleman said, for only a limited period. I think that we can detain someone for up to 96 hours before handing them over to the Afghan authorities, which now operate under the sovereignty of a democratically elected Government who bear prime responsibility for the custody of such detainees—as any Government must.

Adam Price: Yesterday, the international security think-tank the Senlis Council reported that millions of pounds of compensation promised by British officials to farmers in the Helmand province has not been paid. Some 400 cheques, drawn on a British Government account, have even bounced because of insufficient funds. Does the Secretary of State accept that the resultant damage to good will in the province will make the British deployment in Afghanistan even more difficult and dangerous than it could have been?

John Reid: What I do accept is that if part of the building of a legitimate economy is the interdiction of an illegitimate economy—the production of opium and narcotics—it must be accompanied by some alternative income and livelihood for the farmers. What I do not necessarily accept are the views of the group to which the hon. Gentleman referred. As he will know, it campaigns for the legitimising of the production of opium and drugs on the grounds that they could be used for medicinal purposes. We have considered that, but we do not believe that it is viable in the present situation in Afghanistan. More importantly, the Government of Afghanistan do not believe that that is viable. We must be a little careful about accepting the assertions of people who have an agenda to promote. They are entitled to promote it, but we are entitled to regard it as incompatible in the present situation.

Gerald Howarth: May I first associate the Opposition with the remarks made by the Secretary of State following the further loss of life, albeit not as a result of conflict? It nevertheless illustrates the risks facing our armed forces and the courage with which they are undertaking the missions that we ask of them.
	Does the Secretary of State believe that the two strategic aims of suppressing the insurgents and seeking simultaneously to eliminate the poppy supply in Helmand province are compatible, or does he share my concern about the grave risk of creating an unholy alliance between the Taliban, the warlords and the poppy farmers? If the latter's livelihoods are destroyed, they may vent their spleen not only on Afghan forces but on British troops acting in their support.

John Reid: I thank the hon. Gentleman for his condolences. The strategic aim of the international security assistance force is not to suppress the insurgents and eliminate the poppy trade. That is the strategic aim of Operation Enduring Freedom, which is the American-led exercise to chase the terrorists and the insurgents. The strategic aim of ISAF is to provide the security umbrella within which the Afghan Government can extend their control, the security forces to protect that democratic control can be built up and the economy can be built up. It is in the course of that that we have to tackle the drugs trade.
	I agree with the hon. Gentleman wholeheartedly that in doing that latter task, it is necessary to ensure that if the farmers are, to a greater or lesser extent, dependent on income from narcotics—let us remember that they are Afghan farmers and have nowhere else to go—it would be unwise to remove that income without a replacement income in the short term and a replacement livelihood in the longer term. We would then create not stability, but insurgency. I therefore agree with the hon. Gentleman that that is a very important task in the pursuit of our strategic objectives.

Cadet Forces

Diana Johnson: What steps his Department is taking to support the cadet forces.

Don Touhig: The Ministry of Defence provides direct funding of approximately £95 million a year to allow the cadet forces to offer a vast range of personal development and educational opportunities for young people and, with their nationwide reach, act as a genuine force for good, both for the youngsters who join and the communities in which they are based. In addition, the armed forces support the cadet forces with a significant benefit in kind in the form of training facilities, matériel and some manpower resources.

Diana Johnson: Given the success of project outreach, does my hon. Friend agree that even more encouragement of young people to engage with cadet projects would not only benefit the young people but would fit very well into the Government's respect agenda?

Don Touhig: I certainly endorse the point that my hon. Friend makes. Indeed, just a week or so ago, on 19 March, I had the opportunity to visit an outreach project at Sennybridge. It was a dry and beautiful day. [Interruption.] I should add that there was no rain in the Brecon Beacons on that day, given comments made by Opposition Members. The programme is run by the Army cadet force. It is a project that helps youngsters build confidence and raise self-esteem, and it offers them a positive purpose. Many of them who come from disadvantaged backgrounds certainly benefit from it. Those values are part of the Government's respect agenda, which we can all endorse. I pay tribute to those people whom I saw that day. They work very hard with those youngsters, some of whom come from difficult backgrounds who saw the programme as a second chance—perhaps their only chance—and I pay tribute to those who work in project outreach: it is a great success.

Owen Paterson: As president of the Ellesmere cadets, I wholeheartedly support the cadets and their expansion into state schools—something that the Chancellor said in February he wanted to take place. How and when will that happen, and who will pay?

Don Touhig: The hon. Gentleman refers to one of the most exciting developments in the cadet forces at present. There have been discussions between my Department and officials at the Department for Education and Skills for some time, and we have now extended those discussions to include the Treasury. We hope to announce a series of pilot schemes across the country that will extend the combined cadet force into state schools. We hope that some of the funding will come from the private sector and some from the Government. We have to resolve a number of key issues. Obviously, funding is one of them. We need to identify the schools and ensure that there is appropriate support for the project. We need to ensure that we have enough people to train and take part in those schemes, but we are working very hard, and I hope that, before too long, my right hon. Friend the Secretary of State for Defence will be able to make a further announcement on the issue.

Brian Jenkins: I have in my constituency TS Fort Grange, with 66 youngsters on the books and a waiting list—of course, the RAF and the Army have a similar story—but does my hon. Friend recognise that the biggest stumbling block that cadet forces come up against relates to adult civilian volunteers? How can we hope to expand the scheme, which I would love to expand, if we cannot find ways to encourage more adults to help those youngsters in a very important part of their development?

Don Touhig: My hon. Friend makes an important point. We now have 3,300 units across the country, with 130,000 cadets and 23,000 adult volunteers, but I am sure that hon. Members on both sides of the House recognise the fact that the success of the whole cadet movement is dependent on the ability to attract and retain sufficient adult instructors who are willing to take part. As part of the work that we are now undertaking with the Department for Education and Skills and the Treasury, we hope to address this matter so that we can take forward the agenda. We recognise the difficulties and shortfalls, and it is a major objective of ours to try to correct them.

Bob Russell: How much of the funding that the Minister mentioned goes to the sea cadets?

Don Touhig: I cannot give the hon. Gentleman the precise figures to break down the £95 million that we give to our cadet forces. I am conscious of the various ways in which we raise funding for the cadet forces. That is somewhat haphazard and we should look at it. I am exploring one or two ideas of my own, and perhaps we can consider better longer-term funding by which the cadet forces might be able to apply to a trust of some sort, so that we could ensure that they have a proper stream of funding. I do not underestimate the great work done by the cadet forces—I pay tribute to them for it—and I am conscious of the fact that we have a responsibility to ensure that they are properly funded. I am actively looking at ways to try to improve that.

Mr. Deputy Speaker: I call Sharon Hodgson. I call Mr. David Crausby.

David Crausby: rose—

Mr. Deputy Speaker: Order. I am getting ahead of myself. I call Edward Miliband.

Veterans Challenge Fund

Edward Miliband: What projects the veterans challenge fund has supported in the last 12 months.

Don Touhig: Thank you, Mr. Deputy Speaker, for keeping on track.
	The veterans challenge fund offers £750,000 each year to pump-prime projects that support our veterans strategy. During the past 12 months, the fund has provided funding for a number of projects, including a study by Manchester university into suicide among veterans, support to the project that seeks to find employment for homeless veterans and advice for those who seek to work with veterans in prison.

Edward Miliband: I thank my hon. Friend for that answer. Does he agree that the veterans challenge fund can play an important role in helping excellent organisations, such as the Dunscroft branch of the Royal British Legion in my constituency, at whose annual dinner I am speaking, as part of the veterans day celebrations? Does he further agree that all hon. Members have a responsibility to help to promote take-up and awareness of the veterans challenge fund, so that our most vulnerable veterans can get the support that they deserve?

Don Touhig: I am in the happy position of being a Minister who has money to give away. I want to make sure that more and more veterans organisations apply for funding from the challenge fund. Indeed, I spoke at the veterans forum only last week and urged more organisations to apply. I hope that Members on both sides of the House will recognise the important contribution that the challenge fund makes. There are funds available and I urge Members to look for opportunities for organisations that support the veterans agenda in their constituencies to bid for funding. The number to ring is 0800 1692277 or they can write directly to me and I will give them the address.

Tony Baldry: I am genuinely confused about why that work cannot be done through the Royal British Legion. Will the Minister explain the difference between veterans day and Armistice Sunday? These veterans initiatives are all extremely worth while, but there is scope for some confusion. In a constituency such as mine, it is quite difficult and challenging to find sufficient volunteers to collect for poppy day. There may well be some scope for distraction if we have too many initiatives, rather than concentrating on those that are well established.

Don Touhig: We may be a bit ahead of ourselves: the next question is about veterans day. However, I will respond to the hon. Gentleman's point. We are determined that the 11 November commemoration should remain the national commemoration when the country comes together to remember those who gave their lives for the forces in defence of our freedom and way of life. We in no way wish to take from that important and historic event the solemnity that the whole country places on it and we pay tribute to the work done by the Royal British Legion in helping to promote and organise that event, and in particular in promoting poppy day. The purpose of veterans day follows on from last year's successful veterans awareness week. We wanted to set aside a day every year—we have chosen 27 June—on which the whole country can commemorate veterans and celebrate with veterans. That is more a day of celebration and of paying tribute to those who have given a great deal in support and defence of our country. It is quite clearly different from the 11 November memorial and that is how we want to keep it.

Mr. Deputy Speaker: At the risk of repeating myself, I call Mrs. Sharon Hodgson.

Veterans Day

Sharon Hodgson: What progress the Government have made with their plans to mark veterans day.

David Crausby: What progress the Government have made with their plans to mark veterans day.

Don Touhig: The Government's decision to institute an annual veterans day on 27 June provides a major new opportunity to celebrate the enormous contribution that veterans have made to our country. Plans are progressing well for a London event, linked with the celebrations of the 150th anniversary of the institution of the Victoria cross, which will pick up on the qualities of supreme courage shown by those who are awarded that medal. I am also encouraging the involvement of school children, veterans and other members of the public right across the country so that we make this a truly national celebration of the contribution that veterans have made to life in our country.

Sharon Hodgson: What role can hon. Members play in encouraging their constituents to mark that important day?

Don Touhig: I hope that colleagues on both sides of the House will take the opportunity to talk to veterans organisations in their constituencies and to their local authorities and others so that we can organise all sorts of events to commemorate veterans day. It is important that we recognise that veterans come in all ages, shapes and sizes. In Newcastle recently, when I did a radio interview about the advertising campaign that we were launching for the Veterans Agency, it was put to me that veterans are generally people who fought in the last war, but I was alongside a veteran who was in her 30s and had two young children. Veterans come in all ages, shapes and sizes and have made a huge contribution to our country. I hope that veterans day this year will raise awareness across the country that a veteran is someone who has served in our armed forces. Some 23,000 people leave our armed forces every year and they should be honoured as veterans as much as anybody else.

David Crausby: I thank my hon. Friend for that reply. Is he aware that Bolton United Services Veterans Association was formed 100 years ago, in 1906, to provide welfare and comfort to servicemen who suffered in the Boer war? It continues to do a fantastic job to this very day. Will he see whether he can provide any additional help to it in celebrating its centenary?

Don Touhig: Yes, of course I will. Indeed, I invite colleagues on both sides of the House to come forward with ideas. If we are able to provide support and encouragement, and even help to look for some funding, we will certainly do that. We want the day to be an annual commemoration and celebration of veterans. I pay tribute to the organisation to which my hon. Friend refers. If he would like to get in touch with me directly, I will do everything I can to help the commemorations and celebrations in his constituency.

Patrick Cormack: Is veterans day going to be a public holiday; and if not, why not?

Don Touhig: I had to answer such a question about St.   David's day when I was a Wales Minister. It is a problem, but there are no plans to make veterans day a public holiday. However, I would say that we see this as a process, not an event. We think that the day will evolve year after year. We will stick to commemorating and celebrating veterans on 27 June, and I have no doubt that in time there will be a great many events throughout the country that will lead us to celebrate and cherish what our veterans have done. Who knows? At some time in the future the hon. Gentleman's point might well be on the agenda, but it is not at present.

Julian Lewis: May I express a degree of surprise and puzzlement about the origins of veterans day? Does the Minister accept that the Government have received strong support from the Opposition for a whole raft of commemoration events, whether they be for the battle of the Atlantic, or the end of world war two—VE-day and VJ-day? Can he honestly say that the Chancellor of the Exchequer had serious discussions with the Ministry of Defence and the Veterans Agency before making the announcement? The Chancellor did not seem to be aware that there was already an archive of veterans' memories when he talked of children going round with tape recorders recording them—as the Minister knows, the Imperial War museum does that very well. Did the Chancellor realise that, in America, veterans day is the same as Armistice day, and does the Minister accept that veterans day could, to some extent, undermine Armistice day in this country?

Don Touhig: On the last point, I do not. As I said earlier, I am very keen that we hold 11 November in a special place in the hearts of the whole country as a day on which we solemnly remember those who made a sacrifice for our country to defend the freedoms that we enjoy today. Veterans day is meant as a celebration for veterans of all ages who have served our country at all times in the past.
	I can tell the hon. Gentleman that I welcome the support of the Opposition—all parties in the House—for the various decisions and acts that we have taken to commemorate and celebrate veterans. However, when my right hon. Friend the Secretary of State for Defence launched veterans awareness week last year, he made it quite clear that it would not be a one-off event and that we would have ongoing events. We have concluded—this was the reason for his announcement—that we will have a veterans day this year. We think that 27 June is the appropriate time of year to hold it for various reasons, such as the fact that it is away from 11 November and the time at which we celebrate Her Majesty's official birthday. I hope that everyone will see the day as a significant move forward to recognise our veterans' contributions, support it and do all that they can to make it a success.

Educational Qualifications

Patrick McFadden: How many members of the armed forces gained a recognised educational qualification in the last 12 months.

Don Touhig: The armed forces provide opportunities to gain recognised qualifications through the accreditation of military education and training programmes and attendance on full-time courses. In thefirst six months of the financial year, some 13,000 qualifications were achieved, ranging from apprenticeships to post-graduate awards. In addition, approximately 13,500 level 1 awards in either literacy or numeracy were achieved during 2005.

Patrick McFadden: I thank the Minister for his reply. I am sure that he agrees that education and training make an extremely important contribution to our armed forces. Does he agree that the combination of future defence training on a single site could offer huge educational benefits to the armed forces? Does he further agree that RAF Cosford in the west midlands—it is in the constituency of the hon. Member for The Wrekin (Mark Pritchard)—with its excellent transport links, the value-for-money bid behind it and its location in an existing network of excellent aerospace, engineering and technological skills, is the ideal place for such future combined defence training?

Don Touhig: I do not know why, but I thought that my hon. Friend would refer to the defence training review. It was at the back of my mind.
	The defence training review programme is at an advanced stage. Bidders' proposals for both packages of training have been received and are being evaluated. All bidders understand the potential of Cosford and St. Athan, the other possible location. Naturally, this is a competitive phase. We will go through the process in an open and transparent way. A decision will be made at the appropriate time on the future of the defence training review. I acknowledge the importance of training, and the important contribution that defence training makes to our whole economy.

Philip Hollobone: Is the Minister concerned that the increased speed of turnaround for overseas deployments is having an impact on educational opportunities, in particular for younger soldiers?

Don Touhig: No, I am not.

John Smith: Given the importance of educational achievement in the military, will my hon. Friend give a categorical assurance that no single service will unduly influence the evaluation process taking place for the defence training rationalisation programme and threaten to undermine the Government's policy of achieving a modern, flexible, agile and new system of training that is genuinely tri-service and based on one site?

Don Touhig: Let me make it clear that an extensive and robust evaluation process is in place to examine the bidders that seek to win the defence training review programme. The recommendation will come to me later than I had anticipated, and it is more likely that a decision will now be announced in October. However, I want to make it clear that that will be open and transparent. There is an independent evaluation at every stage of the operation, and I want everyone to be assured that the decision will be taken in the best interests of defence training and the best interests of Britain plc.

John Bercow: The Minister's reply to my hon. Friend the Member for Kettering (Mr. Hollobone) was insubstantial and unsatisfactory. The time between infantry deployments is three months shorter than the publicly stated target of the Ministry of Defence. That must have some impact. What quantitative or qualitative assessment has the hon. Gentleman made?

Don Touhig: The shortness of the answer does not in any way undermine its quality. I hope the hon. Gentleman accepts that. However, I will take his point on board and further consider his comments and those of the hon. Member for Kettering (Mr. Hollobone). If appropriate action is needed in terms of writing to them, I will certainly do that.

India

Ashok Kumar: If he will make a statement on co-operation with India on defence issues.

John Reid: In September 2004, the United Kingdom and India signed a joint declaration reaffirming the commitment to the comprehensive strategic partnership that exists between our two countries. Co-operation on defence and security issues forms an important aspect of this partnership, and we have excellent defence relations on a range of activities, including joint exercises, the co-production of defence equipment and high-level strategic dialogue.

Ashok Kumar: I thank the Secretary of State for that reply. I praise the Government for their efforts in building relations between Britain and India. Our relationship is the strongest it has ever been, certainly in all the years of my adult life. Given that the declaration was agreed nearly 18 months ago, what real progress has been made between us and India on defence co-operation?

John Reid: I thank my hon. Friend for his comments, which recognise the closeness of the relationship, not only because we have a strong bilateral link with our Indian colleagues, but because we fully recognise the strategic importance of India and its emergence as a great world power.
	Our defence engagement with India is growing significantly. Last year, for instance, we held the first joint Army exercise, and we are now planning for joint naval and air exercises later this year. We have a number of other bilateral relations. On the industrial side, there has been a major contract for the Hawk jet trainer, and there are other aspects, too. We have also formed an excellent platform, through the purchase of the Hawk, for co-operating on other defence matters, such as the joint training of Indian pilots alongside their British counterparts at RAF Valley. Of course, we have strongly supported the US-Indian nuclear initiative from its inception. We are beginning to put a lot of flesh on the bones of our partnership.

Afghanistan

David Wright: What discussions he has had with NATO and other allies on the deployment of British troops in Afghanistan.

John Reid: I have regular discussions with NATO and other allies regarding the deployment of forces into Afghanistan, including a recent informal meeting of NATO Defence Ministers at Taormina.

David Wright: Further to the Secretary of State's earlier reply about British forces in Afghanistan undertaking predominantly a policing role, will he tell the House what discussions he has had with neighbouring nations, and indeed NATO forces, about Afghanistan's fairly porous borders, where insurgents come across from other countries and then escape and evade capture? How does he ensure in those discussions that British troops on the ground are protected effectively?

John Reid: I would not accept the description of a policing role, although my hon. Friend is correct in that I did make the point that we are not in Afghanistan primarily to wage war or to search for and destroy terrorists. Rather, we are there to act as a protective military force, protecting not only ourselves but the Afghan Government and those working with them to build their economy, their democracy and their security.
	There are two elements to our force protection. The first is our force configuration—including air mobile components and Apache helicopters deployed for the first time in action—which was specified by our chiefs as the necessary one to defend our forces. Secondly, we are of course not going into the south of Afghanistan alone: to the east of us will be about 2,500 Canadian troops; and to the north in Oruzgan province there will be 1,400 Dutch troops, several hundred Australians, and Estonians and troops from the Afghan national army. There are around 9,000 troops there, and although I do not for one moment belittle the difficulties and dangers of deployment to the south, I am satisfied that, subject always to preliminary operations of our forces on the ground and what they discover, we have the configuration necessary to protect our troops.

Geoffrey Clifton-Brown: The Secretary of State has set out this afternoon three rather general aspirations that the deployment of our troops and NATO troops to Afghanistan is supposed to support—namely, promotion of democracy, economic infrastructure building and poppy eradication. Will he, perhaps by way of written answer, set out more detail on those three aspirations so that the House and the country at large can judge whether they have been achieved?

John Reid: On the first point, the House will accept that not only did my predecessor set out the origins of our intervention in Afghanistan but I made an oral statement clearly outlining those aspirations at the recent deployment of our troops to Afghanistan. Secondly, it is rather difficult to set out now what we have achieved there since we have hardly even got the troops there. A better time to do that would be after a period spent there.

RAF (Lift Capability)

Nick Hurd: What assessment he has made of the lift capability of the Royal Air Force.

Adam Ingram: We keep our air lift capability under review to ensure that we have access to sufficient capacity to support operations.

Nick Hurd: I thank the Minister for that reply and remind him that on 26 January the Secretary of State confirmed to the House the "essential" role of both support and attack helicopters in our operations in Afghanistan. Will the Minister confirm the accuracy of reports in The Mail on Sunday this weekend suggesting that of 227 Lynx and Gazelle helicopters only 94 are fit for purpose and of use? If those reports are true, can the Minister explain how we have come to this sorry pass?

Adam Ingram: Reluctant as I am to confirm anything in The Mail on Sunday because it is always hard to find anything that I would agree with in that newspaper, I can say that the report was based on a written answer that I gave—

Julian Lewis: That is why it is unreliable.

Adam Ingram: What I was going to say was that "fit for purpose" means that there are a number of helicopters that are just short of attaining that, and one has to look at fleet availability in the round. In terms of what is required, the capability will be there and it will be sustained. Let us be clear: the Apache attack helicopter, which is a very important force, will play its part in Afghanistan if it is called upon to do so.

Combat Identification

David Kidney: What steps his Department plans to take to improve combat identification.

Adam Ingram: The National Audit Office report on progress on combat identification published earlier this month identified a number of areas where we are pursuing improvements in combat identification, including working with international partners on compatible approaches and solutions; delivering new equipment capability; putting greater emphasis on human factors; improving data collection; and learning from operational and exercise experience. We shall continue to take that work forward to a conclusion.

David Kidney: I thank my right hon. Friend for that answer. Is he aware that David Clarke was 19 when he died in Iraq three years ago last weekend? David's tank was hit by a shell fired by another British tank, but obviously that is not the only incident of so-called blue on blue during the conflict in Iraq. Does my right hon. Friend agree with my summary of the NAO report that the Ministry of Defence is doing the right work on combat identification and has the right plan of action for the future? However, the report advises the Department to undertake that work with much more urgency. Does he agree that it would be a fitting tribute to David and all the brave troops who have died in Iraq in such incidents if we completed that work quickly?

Adam Ingram: I know that my hon. Friend takes a close interest in the matter, and I am only too aware of his constituent's age. The board of inquiry into the Challenger incident made recommendations in eight specific areas, including operational doctrine and training and procedures, and they have all been accepted and followed up.
	It takes time to ensure that there is interoperability and compatibility between allies. If we develop new technical solutions to deal with the problem, we must ensure that they stand the test of time, are robust and meet specific needs. Anyone who understands the issue, as my hon. Friend does, knows that it is not just about technical solutions but about situational awareness and dealing with the human factor. Lessons on training and approach have had to be learned from the tragic incidents that have taken place, and they will clearly help us to improve in all those areas.

Iraq

Laurence Robertson: If he will make a statement on the safety of British soldiers in Iraq.

John Reid: I am deeply saddened by reports of a bomb at a United States-Iraqi facility near Mosul in Iraq. I understand that there are numerous casualties, although the situation is still developing. Such attacks not only identify the threat to our troops and those of the coalition but highlight the barbarism of terrorists who go to sickening lengths to prevent the progress of democracy and security in Iraq. We will not be cowed by the actions of the minority, nor will our troops. We will not leave under such threats, and we will stay in Iraq as long as the Iraqis need us. We will take all necessary measures to protect our own troops.

Laurence Robertson: I thank the Secretary of State for his reply, but the whole House will find it depressing. It has been said in Iraq at a senior level that if
	"this is not civil war, then God knows what civil war is."
	The Secretary of State disagreed with that comment, and he has access to far more information than I do. However, it is fair to say that the situation for our troops in Iraq is dangerous. Can he not give the House any further assurance than the answer that he has just given?

John Reid: First, on the question on the situation in Iraq, it was not me who denied that there was a civil war in Iraq but everyone to whom I spoke, including President Talabani, Prime Minister Ja'afari, the Foreign Minister, Defence Minister Delami, Al-Hakim, the head of the Supreme Council for the Islamic Revolution in Iraq, Tariq Al-Hashimi, the leader of the Sunni Iraqi Islamic party and, indeed, Ayad Allawi himself in private on the very day that he said something different in public. I have only conveyed the position presented to me by politicians from a range of backgrounds. Nevertheless, the point is not to argue about the definition of a conflict but to accept that as a result of deliberate provocation and the terrorists' intentional aim to provoke a civil war that is neither imminent nor inevitable there has been an increase in sectarian killings leading to a situation that no one can regard with complacency.
	In that situation, as regards British troops and the area under our control, less than 3 per cent. of the terrorist attacks are carried out in our four provinces. Indeed, 14 out of the 18 provinces of Iraq are relatively unscathed by terrorist attacks. That is not to diminish the significance of the four areas where there are such difficult attacks. Today, again, we have seen some of the horrendous consequences of that. Finally, rather than be divided by the provocation of sectarian violence, the best thing the Iraqi politicians could do is what they are doing: come together in unity to form a Government of national unity. That should give heart to us all.

Liam Fox: Will the Secretary of State comment on reports about increasing Iranian involvement in anti-coalition activities, including the supply of improvised explosive devices, infiltration of the security forces, and the training of insurgents, all of which pose increased risks to British forces? Can he again assure the House that there will be no premature withdrawal of forces for domestic political reasons? If the answer to the question "Who won the Iraq war?" becomes "Iran", that would represent a catastrophic strategic failure.

John Reid: On the first point, I can do no better than repeat what I have said before about the linkage of the bombs that have in recent times been discovered in the south of Iraq. We believe that they are linked through Hezbollah to Iranian influence, though we have no concrete evidence that they are linked to the Iranian Government. The Iranian Government deny such linkage and we have made it plain that there should be no role for any country bordering Iraq other than to support the democratically elected Iraqi Government.
	On the hon. Gentleman's second point, I can give an assurance, as I have done all along and did again today, that we will hand over to the Iraqis when the conditions on the ground permit. We will not stay one day longer than we are needed and wanted by them, but we will not leave one day too early against their wishes or under threat. The only thing that is achieved by continuing terrorist activities is to delay the day that the multinational forces withdraw, not to expedite it.

Rural Payments Agency

James Paice: To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on the Rural Payments Agency.

Margaret Beckett: In my written statement to the House on 16 March, I told the House that the Rural Payments Agency had advised me for the first time on 14 March that it would no longer be possible to make the bulk of single payment scheme payments by 31 March, and that in the light of this unacceptable situation a new chief executive would be appointed. I fully understand and share the anxieties that these events will cause to the farming community, and deeply regret that this unacceptable situation has arisen.
	I received an initial report from the acting chief executive, Mark Addison, on the situation at the RPA on 21 March. There are substantial problems facing the RPA in getting SPS payments out to farmers—much greater than had previously been reported to Ministers. As I know the House and the farming community would expect, speeding up those payments remains the overwhelming priority of Department for Environment, Food and Rural Affairs Ministers and of RPA staff. However, it remains essential that actions taken now in response to these problems are carefully considered but also sure-footed, to avoid making the problems still worse in the future.
	Mr. Addison's report identified some initial steps to take, which should enable us to speed up payments without losing sight of the need to manage properly the disbursement of a large sum of public money. These are the initial steps that I have sanctioned: focusing resources in the RPA on making the 2005 payments as fast as is legally possible; removing disproportionate checks from the payment authorisations system to speed up the flow of payments once claims have been validated; prioritising work on the validation of claims to release the maximum value of payments as quickly as possible as opposed to the maximum number of claims, which is an action that will mainly benefit historical customers; centralising key mapping work at the most productive office, Reading; reviewing what further steps can be taken to simplify the process to allow decisions to be made later this week; strengthening the RPA's capacity in key areas; and changing the RPA's structure to streamline command and control.
	The Minister with responsibility for sustainable farming and food—my noble Friend Lord Bach—and the RPA's acting chief executive have invited senior representatives of the industry to weekly meetings, the first of which took place on 22 March, so that close contact can be maintained. They will also urgently engage with the banks and other key stakeholders. The team at the RPA is central to the success of those steps. I am confident that with Mark Addison at the helm we have the right people in place for the job, and their work and commitment remain key to delivery. The staff of the RPA have worked with absolute dedication throughout, often in the face of considerable difficulties, and I know that the whole House hopes and expects that they will continue to do so.

James Paice: I remind the House of my entry in the Register of Members' Interests, and I thank the Secretary of State for her answer. In a newspaper produced by the Department for Environment, Food and Rural Affairs that landed on the doorstep of every farmer in the country just six days ago, the headline stated, "Full payments on track for farmers". I hope that the Secretary of State is ashamed that that happened.
	As the Secretary of State has rightly said, the first priority in this debacle is to get the money to the farmers who desperately need it. Tens of thousands of decent, hard-working family farmers were promised their payments, which in many cases cover up to one third of their income. In time they will need to stop relying on such payments to support their businesses, but this is the first year of painful transition. Will the Secretary of State tell us how many payments will now be made by the end of March? Exactly when will all the outstanding payments be completed? What is she doing about all the non-validated entitlements, and will she confirm that they will be paid on the same time scale? Will she consider making an interim payment for everyone who cannot receive the full amount by the end of March? That could be done manually, even if the computer cannot cope. The delays are costing the industry £10 million to £12 million a month. Will the Government repay the interest on any related loan until the RPA issues the payment? Will the Secretary of State seek a derogation from the EU to delay the 15 May deadline for next year's applications? The RPA should not be sending out next year's forms instead of last year's money.
	We also need to know how the crisis arose. Given the continuing mapping problems and other issues, the crisis was obvious to us all, yet throughout those months the Government told us that we were scaremongering and that the targets would be met. In January Lord Bach told the Oxford farming conference that 96 per cent. of payments would be made by the end of March. In the same month, the Environment, Food and Rural Affairs Committee report stated:
	"The Committee is dismayed at the complacency of Defra Minister, Lord Bach, who refused to admit that any mistakes had been made or that anything could have been done differently to avoid the problems."
	Lord Bach called that report "shoddy" and said:
	"I am deeply disappointed with the timing of this report which could create unfounded alarm and uncertainty in the farming community."
	On 2 February the Secretary of State told this House that the 96 per cent. target would not be met. Three days later, Lord Bach told me in a letter that he still expected "the bulk of payments" to be made, although he went on to tell Farmers Weekly that "the bulk" meant more than 50 per cent. Just a month ago the Secretary of State told the National Farmers Union conference:
	"Having demonstrated last week that its systems are working as planned, the RPA is now in the process of authorizing payments".
	That is some plan!
	If Ministers were misled by the chief executive of the RPA it is right that he should go, but that does not absolve Ministers from this catalogue of incompetence and ministerial denial. This House and the industry are entitled to an apology, because the chain of accountability reaches the top. It was the Secretary of State who decided, rightly, to introduce a complicated hybrid scheme, but then opened it up to 48,000 new applicants, with 360,000 new parcels of land that had not previously been receiving support. Then, to make it worse, she rammed it into place in the first year of the three-year window—and that is where the problem began. But even Germany and Denmark, which also have hybrid schemes, paid almost all their farmers months ago.
	Sacking a civil servant is not the end of the matter. Ministers knew that there was a problem because they reduced the targets, but they appear to have done nothing until I challenged the Prime Minister two weeks ago. What questions were asked? How many Ministers actually went to the RPA to see what was happening? Did nobody have the gumption to ask why farmers were reporting so many problems? The Government's usual "blame somebody else" line will not wash. Lord Bach criticised others for saying what was abundantly clear to everybody, but he was wrong. A Minister who truly had his finger on the pulse of farming would have seen this coming and prevented it from happening. He has lost all credibility in the industry for which he is responsible, and he should go. This House and, more importantly, the farming industry deserve better.

Margaret Beckett: There are rather a large number of questions there, Mr. Deputy Speaker, but I will do my best to answer as many of them as I can— subject to your wish to make progress.
	First, yes, I am embarrassed and dismayed by the issue of the newsletter to which the hon. Gentleman referred. There is no doubt that when it was produced we were on track, payments were being produced on the date that we had been told—20 February—and validations were being issued to farmers, just as had been foreseen. It was anticipated, and continually reported to Ministers, that once that process had begun it would be speedily ramped up. Of course, that was the part that was not fulfilled.
	I cannot give the hon. Gentleman answers on time lines and dates at the moment, but I assure him that I will keep Front Benchers and the House as informed as I can with reliable information. I am sure that the whole House will recognise the strong wish of the new acting chief executive not to be pinned down to proposals for the future until he has more information, because he does not wish to repeat what he views as previous over-promise and underperformance. The hon. Gentleman will know, as will the House, that the payment window ends at the end of June 2006, but I cannot give him a pattern of payment between then and now.
	The hon. Gentleman asked about non-validated interim payments. We are looking at that whole issue. We are not ruling out the potential for interim payments, but we are reluctant to make interim payments if there is any possibility of their jeopardising the time scale for making full payments. I think that the whole House will understand that, and understand, too, our wish to keep the rest of the scheme on track.
	The hon. Gentleman said that the situation was obvious to all. I genuinely think that he was quite unjust to my noble Friend Lord Bach, who has spent not just hours but days working on this over many, many months. [Interruption.] I say to the hon. Gentleman, and to the House, that when the scheme was initially being considered and the arrangements were being put in place, a substantial contingency of time was of course built in to allow for any hiccups and difficulties. Over time, that contingency was gradually whittled away. My noble Friend has maintained the closest possible interest, and I, like him, continue to reject any charge that there was complacency on the part of Ministers. Ministers are dependent, as is everyone in the House, on the information that they are given and the confidence that they can place in it. [Interruption.] I simply repeat to the hon. Gentleman what the proposal to us was. We published this more than a year ago; I cannot now recall exactly when, but it was a long time ago. The proposal to us was that the first payments would begin to flow in the week of 20 February, and they did. It was after that that the scheme began to break down.
	There were repeated challenges by Ministers, and repeated demands for harder information about the number of payments that had been made. As a result of those challenges and demands the chief executive conveyed to me, on the evening of Tuesday 15 March, that he could no longer say that the bulk of payments would be made by the end of March—although he continued to insist that 96 per cent. would be made in the payment window, by the end of June. That is why we took the steps that I outlined. We will continue to keep hon. Members and the industry as fully informed as possible, and I anticipate a further report on the situation later this week.

Christopher Huhne: The Secretary of State talks about using up margins of contingency, but surely there is no way of describing the matter other than as a botched introduction of the single farm payment scheme in England. That is worrying for many tens of thousands of farmers who rely on the payments for their cash flow, and for maintaining their obligations.
	I have no doubt that there were problems at the Rural Payments Agency of which Ministers were not aware. There can be no other explanation for the extraordinary contrast between the assurances of the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for South Dorset (Jim Knight), at Question Time on 9 March and the sacking of the RPA chief executive only a week later. However, DEFRA Ministers must take their share of the blame.
	First, Scotland and Wales have almost finished payments on the simpler historic basis, yet DEFRA Ministers decided to implement the more fancy scheme and they must surely bear responsibility. Do they accept that their decision to abandon the historic basis of payment has been a major cause of the difficulties in England in comparison with the relative success in Scotland and Wales?
	Secondly, the new scheme could have been introduced with a delay, as happened in the Netherlands. Do Ministers accept that they made a mistake in trying to run before they could walk?
	Thirdly, do Ministers accept that the scheme's implementation has been botched from the start, and that the evidence for that is not only in the delays that farmers are now suffering in the payments that they were promised but in the spiralling cost—from £18.1 million to £37. 4 million, as revealed by the Select Committee—of the IT system procured for the single farm payments?
	The Secretary of State has given no assurances about the timing of the payments that are due. We must press her for assurances for farmers who expected the bulk of the payments to be made by the end of March about when they will be made. If she cannot give them, will Ministers authorise interim payments so that farm businesses can maintain their obligations to their suppliers and creditors? Will Ministers assure us that they have contacted the principal lending institutions to the farming community and accepted full responsibility for any delays in farmers' payments that may arise through DEFRA's broken promises?

Margaret Beckett: The hon. Gentleman drew on the experience of Scotland and Wales, and he is right to say that they have adopted a different system—although initially they made partial payments, and I am not certain whether Scotland is yet making full payments. Wales has begun to do that. However, those systems are not only different but involve a much smaller number of claimants. The hon. Gentleman described the scheme that we introduced in England as "more fancy"; a more accurate term would be "more sustainable".
	The hon. Gentleman spoke as if it would always be better to pursue the historic system. He is new to the portfolio and will not therefore have the subject at the front of his mind, but under the historic system, people continue, now and for the future, to be paid on the basis of what was received by someone farming the same land between 2000 and 2002. That appeared to be neither beneficial in driving farming forward to be receptive to the market, nor something with which taxpayers or farmers would be content for long. There are already rumblings in member states that have maintained the historic system about how unsatisfactory it is. This is not, therefore, a simple black-and-white question of why we did not do what it is claimed would be easier.
	The hon. Gentleman made a further point, and I was not sure whether it was based on information from the Select Committee report. If it was, I regret that. There is a misunderstanding that the cost of the information technology system is somehow evidence of things going wrong. The RPA was already set to undergo a programme to provide it with new IT. That was the £18 million scheme that was initially intended to be put in place. However, that was agreed before the common agricultural policy reform proposals, which obviously resulted in the need not only for a new IT system but for one that would perform a different task. That is why there is a difference, and the two sums involved are not comparable. We are not talking about twice the money for the same scheme changes.
	The hon. Gentleman also asked about interim payments. I can only repeat what I said earlier to the hon. Member for South-East Cambridgeshire (Mr. Paice), which is that we continue to keep that matter under review. I shall not be drawn into making forecasts, other than to draw attention to the scale of the payment window. The hon. Member for South-East Cambridgeshire referred to the speech that I made to the National Farmers Union annual conference, at which I said that payments had begun to flow on 20 February—as they had—and that I had been advised that, very shortly, some £350 million would already have flowed.
	When I saw the chief executive of the RPA on the evening of 14 March, however, he told me that only about £60 million had been paid by that date. That was the first intimation that DEFRA Ministers had had that those were the figures involved. However, that sum was disbursed over about three and a half weeks. In the period since that date—just over a week of payment days—some £75 million has already been disbursed. That is obviously not enough, but it is certainly a big improvement on the previous figures.

Several hon. Members: rose—

Mr. Deputy Speaker: Order. I seek the help of the House. There are two ministerial statements to follow, in addition to the resumed Budget debate, and I would very much appreciate single brief questions and short answers.

Paddy Tipping: The Secretary of State has made it clear that she regards the situation as unsatisfactory. Will she assure the House that the right approach is being taken in moving from production subsidies to payments for public goods? Is not the important thing now to ensure that farmers and landowners have a good idea of the new timetable for when payments will be made before June?

Margaret Beckett: My hon. Friend is entirely right to say that the key issue now is to give farmers as much certainty as we can. Nothing would be worse than to give them information that was less than reliable. I would also say to my hon. Friend, as I should have said to the hon. Member for Eastleigh (Chris Huhne) a moment ago, that we are in touch with the banks. They understand that the payment window runs until June, and they have hitherto given us no indication of any difficulties that they had not anticipated.

Michael Jack: In the light of the fact that the Select Committee, which I have the honour of chairing, has twice warned of the potential failings of the RPA and its computer system, may I seek an assurance from the Secretary of State that all reasonable requests from my Committee for full disclosure of information about this debacle—this failure of communication between officials and Ministers—will be complied with in any subsequent inquiry that we might hold to try to unearth what has caused this complete mess?

Margaret Beckett: I can certainly give the right hon. Gentleman that assurance. He knows that I have sought to keep him, as well as those on the Opposition Front Benches, fully informed of developments as they have unfolded. Hon. Members may not realise that we had already planned a long-term review of the RPA, or that it was scheduled to begin as soon as the bulk of the payments had been disbursed. I have now announced that review formally, to make it public, and we shall proceed with it as fast as we can.

Gavin Strang: As has been said, Scottish farmers have already received their single farm payments. May I assure my right hon. Friend, however, that they derive no satisfaction whatever from the situation in England? They understand, as she does, how vital those payments are to the incomes of working farmers in England. Indeed, she has pointed out that failure to receive them could result in people being pushed above their bank borrowing limit. She has undertaken to keep the House informed of developments. Will she make a statement on the matter after the Easter recess?

Margaret Beckett: I do not rule that out; it will, of course, partly be a matter for the House.

David Curry: Is the Secretary of State aware that under the old integrated administration and control scheme introduced by the previous Government, each form was dealt with by a single official in a single payment centre? Is she aware that under the new system each form is divided into tasks, so it is not merely shuffled between officials but between centres—at the mercy of a failing computer system, which has managed to wipe off all the hill farm allowance payments for my constituency? Can we not revert to a system that gives the farmer accountability and the official efficiency, and liberates us from the tyranny of the computer?

Margaret Beckett: I always listen with great care to the right hon. Gentleman's observations, and frequently find great wisdom in them. I assure him that one of the reasons Ministers decided to commission a long-term review of the RPA—although we had not announced it—was our considerable concern that although there is no doubt that the organisation is customer-focused in that the staff care about their customers and are working hard and trying to do their best, its systems are not remotely customer-focused. That is one of the issues that I hope that we will address, perhaps even in the short term.

Helen Goodman: Obviously, the situation is most regrettable, and I am grateful to the Secretary of State for the measures that she has announced this afternoon. Will she consider paying interest or financing costs for farmers beyond the end of March, if those arise because of late payments?

Margaret Beckett: I cannot give that undertaking—although, as I said, we are keeping the whole position under review, not least because the official payment window runs until the end of June. Although I understand the concerns and anxieties of farmers, my hon. Friend will know that extensive discussions have been held with people's banks, more are due, and there has been more than a year's notice that there would be some delay and payment would be made later in the window.

Kenneth Clarke: Does the right hon. Lady agree that it might take a long time to recover from this managerial collapse and put the Rural Payments Agency on a sound footing? The most immediate problem is the hardship that will undoubtedly be suffered by many blameless farmers, who have no idea what they will do about the loss of this vital income over the next month or two? Does she accept that it is not good enough to say that interim payments will be kept under review? Her first priority must be to try to put in place some manual system that will get out interim payments as quickly as possible to people who will otherwise probably be forced to abandon their farms.

Margaret Beckett: I assure the House, and the right hon. and learned Gentleman, that that is being carefully considered. He will understand that there is no wish to do anything that will disrupt the likelihood of the majority of payments going out. I have instructed the acting chief executive that the large number of people who have an almost minuscule entitlement—on the whole, new claimants—should not be his priority. In so far as possible, he should perhaps worry slightly less about some of those for whom the level of the payment might not be a matter of immediate desperate concern. The whole focus of the RPA's attention should be on those who need the money, about whom the whole House is concerned.

Ian Davidson: What steps are being taken to reduce the welfare dependency that seems to be exhibited by many farmers? Does she agree that we have not seen the Tories so excited for quite a long time, and that only when they are trying to get their snouts and those of their friends in the trough do we see them so motivated?

Margaret Beckett: My hon. Friend has long been a critic of the system of farm support in this country. I know of his concern for ordinary people facing difficulties, however, which he will extend to people in any circumstances. In the longer term, the purpose and effect of the overall reforms of the common agricultural policy introduced in 2003 will be to link farmers more closely to the market and, as my hon. Friend the Member for Sherwood (Paddy Tipping) said a few moments ago, to put public money in payment for public good—things that the market will not reward.

Douglas Hogg: I think that the right hon. Lady will know that the entitlement statements being sent out do not show the methods of calculation. That means that the individual farmer cannot check whether the final figure is right or wrong. Will the right hon. Lady please examine the position?

Margaret Beckett: Yes.

Mark Pritchard: Will the Secretary of State agree to meet a delegation of farmers from Shropshire? Is she aware of the suffering that has been caused over many months by the Government's dithering, delay and incompetence?

Margaret Beckett: As I have said, regular meetings are scheduled with stakeholder representatives of the farming community. I hope the hon. Gentleman will understand, however, that the priority of Ministers and officials is to concentrate all our efforts on making payments. Of course we will keep the House and all Members as well informed as we can, but getting the money out is the priority.

Patrick Cormack: When the south Staffordshire farmers who were reassured by Lord Bach's Oxford speech talk to me of Crichel Down, and ask what has happened to the doctrine of ministerial responsibility, what do I tell them?

Margaret Beckett: The hon. Gentleman can tell them that a bold move was made in the 1980s: the setting up of such things as agencies, which are at one remove from Government and carry out executive tasks. It is an agency that is carrying out this work.

John Maples: But the Secretary of State designed the scheme herself; she did not have to introduce it. She announced it more than a year ago. Now she is saying that it was not until 14 March that she was aware of how badly wrong it was going—although many of us had been writing to her for weeks telling her that exactly this was going to happen. If she thinks that her Minister has been doing a good job she had better get a grip on the issue personally, or the payments will not even be made by the end of June.
	May I ask the Secretary of State specifically whether the Government will compensate farmers who have had to incur loans and pay interest because of the late payments? May I remind her how fast the Government are to extract interest from their debtors when they are late in paying their taxes?

Margaret Beckett: The hon. Gentleman is right to observe that Members were saying that the scheme was going badly wrong. Members were saying that payments would not begin on 20 February. They were saying that entitlement notices would not be sent out. [Interruption.] I am not sure whether those who are groaning attend agriculture questions very often.
	Let me simply say to the hon. Gentleman that undoubtedly there were real concerns and anxieties, and that those were reflected at ministerial level. That is why the Minister in particular, and my officials, spent so much time working with the RPA. The fact is, however, that payments did begin when they were intended to, and notices did begin to go out when they were intended to. What did not happen was the dramatic ramping up of the speed of payments that was expected to follow. As late as 10 March, the RPA was still insisting to Ministers that more than 51 per cent. of payments would be made by the end of March, and 96 per cent. would be made by the end of June.
	The issue of compensation has been raised before. I have already told the House that the payments window closes in June 2005—[Hon. Members: "2006."] I am sorry, I meant 2006. Farmers are probably even more aware of that than Members. They know perfectly well that payments are made throughout the window; that is why the question of interest does not arise.

Keith Simpson: The Secretary of State has attempted to slough off any ministerial responsibility, but if she looks at the report of the debate in Committee on the statutory instrument that set up the Rural Payments Agency she will find that I—along with many others, including some of her hon. Friends—questioned whether the agency's computer system would be able to handle what was being proposed then, let alone now. Given that that was five years ago, and most of her Ministers are still in place, where does the buck stop?

Margaret Beckett: If that was five years ago, it was long before the negotiations on CAP reform, for a start. Once the decisions had been made about the form and nature of the scheme, Ministers and stakeholder representatives of the industry spent time with the RPA seeking information and assurances on whether it could indeed handle the scheme within the time frame. Those assurances were given, and given categorically—to the extent that stakeholder representatives and Ministers came back immensely reassured and full of confidence that the RPA could handle the issues.
	That was the position at the start. It has to some extent been asserted that the Government were warned from the beginning that the RPA could not handle the scheme. No, we were not: the RPA gave every assurance that it could indeed handle it. As for whether Ministers take responsibility, I am taking responsibility, which is why I removed the chief executive.

Anne McIntosh: I refer to my entry in the Register of Members' Interests. The Secretary of State will wish to apologise for the full answer given by the Minister with responsibility for farms, the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for South Dorset (Jim Knight), at Environment, Food and Rural Affairs questions on 9 March. He has apologised to me in person, but for the benefit of the House it should be placed on the record that his answer was incorrect and misleading in every particular. He said on 9 March that most of the payments had been made and that Scottish and Welsh farmers had been paid in full, when in fact no payments had been made to English farmers. Will the Secretary of State take this opportunity to show her awareness of, and willingness to take action on, two related issues? The market in England has been distorted, in that Scottish and Welsh farmers have the cash in hand to pay more for farm animals than English farmers can possibly pay. Secondly, tenant farmers are suffering particular hardship because they have no assets against which to borrow.

Margaret Beckett: It was graceful of the Under-Secretary, my hon. Friend the Member for South Dorset (Jim Knight), to say what he did to the hon. Lady—outside this Chamber, no doubt—but knowing her as I do, I am sure that she is not implying any wrongdoing on his part.

Anne McIntosh: indicated assent.

Margaret Beckett: I am pleased to see that the hon. Lady is not. Obviously Ministers must give correct information to the House, but they can do so only if the information that they have is correct. When my hon. Friend the Under-Secretary spoke to the House, at that stage he had no cause to think that what he was saying was in any way incorrect. There is perhaps a slight misunderstanding about the position in Scotland and Wales. Obviously I do not have responsibility for payments there, but I think that the hon. Lady will find that not all payments have been made in full, although they are doubtless proceeding. I entirely take her point about tenant farmers, and I am mindful that they are likely to be the most vulnerable people. I can assure her that if there were a way to single them out, I would look for it; however, the best thing to do is to try to get everybody's payments out as fast as possible.

Geoffrey Clifton-Brown: I have repeatedly asked the Secretary of State questions about this issue at Environment, Food and Rural Affairs questions, and I am not a bit surprised at the muddle that she finds herself in. Will she undertake to come to the House in a month's time to give us an update—and so that she does not have to eat further helpings of humble pie, will she guarantee that all valid claims will have been paid by then, or, if that it is not possible, that a substantial amount will have been paid on account? Finally, I should have declared my entry in the Register of Members' Interests before asking this question.

Margaret Beckett: The hon. Gentleman is right: Members did repeatedly ask such questions, and as has always been the practice in any Department of which I have been head, when Members ask awkward questions, Ministers do the same. The answers that Ministers gave to Members were those that Ministers got, no matter how hard they probed. The hon. Gentleman asked whether I would give the House an update in a month's time. I do not necessarily rule that out, but what I can say is that I will keep the House informed by whatever means exist as fully and speedily as I can. If I can give the House a quantified update in a month's time I will, and if I can do so earlier, I will.

Julian Brazier: Will the Secretary of State put back the deadline for the 2006 applications, or give a firm assurance that no farmer will be penalised for repeating an innocent mistake in his 2005 application, which, of course, he has had no opportunity to correct, not having had the result of that application?

Margaret Beckett: The hon. Gentleman makes an interesting and valid point and I undertake to look into it.

Philip Hollobone: Farmers in my Kettering constituency are as concerned about this disgraceful situation as any other farmers in the country. By what date are farmers guaranteed to receive these payments?

Margaret Beckett: As I have repeatedly explained to the House, I am not in the business of giving Members guarantees that I cannot substantiate, but I do guarantee to keep the House informed. I can tell the hon. Gentleman that the payment window expires at the end of June, and it will be the earnest endeavour of everyone in my Department concerned with this issue to make the maximum number of payments as early as we can; we do not want to approach the payment window with payments still to make. But at the moment I cannot give the hon. Gentleman the firmer, clearer or more reliable answer that I know he wants.

John Greenway: I am grateful for what the right hon. Lady said in answer to my hon. Friend the Member for Kettering (Mr. Hollobone), but does she realise that not just farmers but the agricultural supply trade and many hauliers are also dependent on receipt of the payments? Does not she think it important that she gives a date by which, unless a substantial proportion of payments have been made, there will be interim payments? Many of those businesses simply cannot survive until 30 June.

Margaret Beckett: I am grateful to the hon. Gentleman for raising the issue that a wider community depends on farming. He is absolutely right, and we are extremely mindful of the pressures on those business. At this moment I cannot give him a date of the kind that he seeks, but I can certainly tell him that that is part of the consideration. When I told several hon. Members that we did not rule out making interim payments, that was one of the reasons why—so I can assure him that we shall keep the matter very much under review.

Peter Bone: What would the Secretary of State say to Mr. Lonsdale, an elderly farmer in my constituency, who rang me this morning and said, "Without payments, I cannot pay my rent"?

Margaret Beckett: As I said a little while ago, we have been in touch with banks and with those who deal with the financial interests of the farming community, and so far they have told us that they do not anticipate a greater measure of difficulties than normally arise at about this time of year. They are mindful of the situation and will keep it in mind, but we are holding further talks with them to ensure that that continues to be the case.

Graham Stuart: Two of my farmer constituents, Messrs Caley and Leake, were refused any single farm payments because they were days late with their application. When they wrote to Lord Bach he replied that as they had failed to get their forms in on time they should properly receive nothing, and that was the price they should pay. What price will Ministers pay for failing to get payments to farmers throughout the country?

Margaret Beckett: I have already made it plain that Ministers are extremely concerned and dismayed about the position. The system is in the hands of the RPA and as the hon. Gentleman knows, the chief executive of the agency has been removed from his post.

European Council

Jack Straw: With permission, Mr. Deputy Speaker, I should like to make a statement about the European Council that took place in Brussels last Thursday and Friday. As the House is aware, my right hon. Friend the Prime Minister normally makes the post-Council statement to the House. I have been asked to convey his apologies because he is on an official visit to Australia and New Zealand.
	The Hampton Court informal summit in October during our presidency set the framework for the spring Council in Brussels. The economic challenges for many, though not all, member states of the Union are severe. Despite significant progress since the Lisbon agenda was launched, there are still about 20 million out of work in the EU. In some states, in contrast to the United Kingdom, unemployment is about 10 per cent. and almost one in five young people are without a job.
	The British Government know that there is only one way to get Europe back to work and to deliver social justice in a global economy. We base that not on theory but on solid evidence. As my right hon. Friend the Chancellor of Exchequer pointed out in his Budget speech last Wednesday, in 1996 we had the lowest income per head of any of the G7 countries; today, we are second only to the United States. We have grown more quickly, created more jobs and provided more social benefits than most other member states. We have done so by liberalising markets, increasing our competitiveness and investing in the future, including in our public services. The European response to globalisation must emphatically not be a return to old-fashioned protectionism, whether by that or any other name.
	Specific elements of the Hampton Court agenda were energy, research and development, and universities. The case for a more liberal energy market is overwhelming. Gas and electricity prices in the UK in the period between 1996 and 2004 fell much faster than they had done in EU states as a whole, which have kept their energy markets closed. Consumers in those countries will thus gain from a functioning internal market, but so too will consumers in this country. We currently do not have the access to gas that we would have in a more sensitised market. One of the first achievements of the Lisbon Agenda back in 2003 was the decision to liberalise energy markets by 2007. Last week, the European Council reaffirmed that timetable.
	Completion of the internal market is one of four elements in a new approach to European energy policy. At the summit, we also agreed the programme relating to the other three areas, which are to intensify diversification of supply, to promote environmental sustainability and, by the next European Council, to develop a strategy for dealing with countries outside the EU. The Council asked the Commission to present a strategic energy review on a regular basis, starting in 2007.
	On research and development, rising economies, such as China and India, are investing heavily in science and technology. The way for Europe to compete is to be ahead of them and to lead the knowledge economy, rather than protecting old and uncompetitive industries, so the summit agreed the establishment of a European Research Council. That body will be run by scientists and its purpose will be to promote excellence in European research. We expect universities and research communities in Britain to benefit.
	Linked to research and development is the third area: increased investment in universities, where currently only two of the top 20 universities in the world are European—both, I should say, are in the United Kingdom. The European Union has to produce enough graduates of the right calibre and improve links between business and universities if we are to open up and prosper in new global markets.
	In addition to the Hampton Court agenda, the British presidency had taken forward valuable work on better regulation and on the services directive. There was further progress on both those areas at the Council. The summit tasked the Commission to report by the end of this year on measurable EU targets for removing administrative burdens on business, particularly small and medium-sized enterprises, and to press ahead with the reforms undertaken during our presidency, including more simplification of existing EU legislation, further withdrawal of unnecessary or outdated legislation, and more effective use of impact assessments.
	The summit also agreed a way ahead on the services directive. That directive will be of great assistance to British service companies and to opening Europe up properly to a single market in services. The current proposals are not everything that we wanted, but a year ago, some European leaders were declaring the directive dead and buried. It is not and it will represent a significant advance in the process of making Europe globally competitive.
	It is customary that the spring Council concentrates largely on the economic agenda of the European Union. However, all member states shared a deep concern about the recent elections in Belarus and a declaration relating to those elections is attached to the conclusions. We agreed a statement that condemned the actions of the Belarusian authorities in arresting peaceful demonstrators early in the morning of Friday 24 March. We restated our view, based on the assessment by the Organisation for Security and Co-operation in Europe, that the elections were fundamentally flawed. The European Union is now deciding on the restrictive measures that it will take with respect to the Belarusian authorities. The statement makes it clear that President Lukashenko should not escape responsibility. The European Union applauds those who stood up for democracy against the odds and is determined to support civil society and the Belarusian people.
	The situation in Belarus stands in stark contrast to the situation in Ukraine. The OSCE said that yesterday's elections there had
	"enabled voters to make informed choices between distinct alternatives and to freely and fairly express their will"
	and that they therefore
	"further consolidated the breakthrough in the conduct of a democratic election process".
	That is a testament to the remarkable progress made in Ukraine since the orange revolution of 2004.
	Finally, as I am on my feet on European business, the House will wish to be aware that earlier today I issued a written ministerial statement in respect of the successful conclusion of the Gibraltar constitutional reform negotiations on 17 March. The new constitution, which will be put before the people of Gibraltar in a referendum, strengthens the links between Gibraltar and the United Kingdom and thoroughly modernises the relationship between us, which I hope will be as welcome to the people of Gibraltar as it will to the people of the United Kingdom.
	Last week's summit was a further step towards a more outward looking European Union that delivers concrete benefits to its citizens. There is still a long way to go. The British Government are in no doubt that Britain's best interests lie in a European Union that is open to the world, competitive and confident. We will continue to pursue that agenda vigorously.

William Hague: I warmly welcome the European Council's declaration on Belarus—in particular, the call to release those already detained—and we welcome the announcement that measures will be taken against those responsible in the regime. Can the Foreign Secretary tell us more about the measures being considered against Europe's last dictatorship? Does he agree that the free flow of information is a sure way to undermine tyranny? What more can be done to ensure that the people of Belarus are better able to learn what the outside world is really like and hear an alternative view to that of their Government?
	I welcome the conclusion of talks with the Government of Gibraltar and the commitment to hold a referendum. Will the Foreign Secretary confirm whether all this means that his previous commitments to share sovereignty with Spain are now entirely null and void?
	Can the Foreign Secretary tell us about some other important matters that were meant to be discussed in the margins of the Council? Will he confirm whether the Government are advocating a new round of talks between Iran, Britain, France, Germany, Russia and China? What would be the conditions for such talks? What approach to aid and funding will be taken by the EU if the Hamas-led Palestinian Authority does not the meet the criteria set by the Quartet?
	On economic reform and the Lisbon agenda, does the Foreign Secretary agree that it is now clear that the EU is regrettably not on course to become the world's most dynamic and competitive economy by 2010 and, since the Prime Minister started to admit mistakes over the weekend, that it was a mistake for him to describe the Lisbon agenda six years ago in the House as a
	"sea change in European economic thinking",
	with
	"concrete measures with clear deadlines"?—[Official Report, 27 March 2000; Vol. 347, c. 21]—
	just as the Prime Minister now thinks that it was a mistake for him to take the concrete measure of setting a date for his own resignation, albeit without the clear deadline long favoured by the Chancellor of the Exchequer?
	Will the Foreign Secretary acknowledge that the EU is now locked in a pattern of relative economic decline? Can he tell us why the Italian-led joint memorandum against protectionism did not go forward, whether the Government intended to sign such a memorandum and why the British Government did not press ahead with their own version? Does he not think that Britain can give a still stronger lead on such an important issue?
	Is it not alarming that the figures hidden away in annexe 1 of the Council conclusions show that we are investing a smaller share of our national wealth in research and development than the Scandinavian countries, France, Germany or Belgium and that, far from closing the gap, Britain's R and D spending is falling?
	Does the Foreign Secretary agree with the Chancellor that
	"it is unacceptable that fifty per cent or more of regulations come from the European Union"?
	Can the Foreign Secretary tell us what specific EU regulations the Chancellor has pressed to be cut or blocked and what representations the Foreign Secretary and the Prime Minister made in that direction at the summit?
	As for targets to reduce the burdens on business, which were also talked about at the summit, is not a rise in the burden of regulation on business of £50 billion since 1997 a poor way to convince our partners that the Government believe in making business more competitive?
	On the services directive, will the Foreign Secretary now state a clearer view by agreeing with me that the removal of the country of origin principle was a grave mistake and that we need a strong liberalising directive with the freedom to provide cross-border services in the Commission's modified proposal? Is not a free market in services one of the things that the EU was supposed to be about?
	We welcome the emphasis in the conclusions on a real, liberalised single market in energy, with better co-operation between national energy regulators. Will the Foreign Secretary confirm that the proposal for a European energy regulator has been rejected? Does he agree that the Commission's priority must be to ensure that the associated single market rules are enforced? On powers to negotiate energy supply agreements with third parties, although increased co-operation may bring benefits in some areas, does he agree that member states must retain the right to make their own arrangements? I welcome the insistence in the conclusions that energy mix is for member states to decide, but can he tell us how the energy policy for Europe will affect the Government's domestic energy review?
	The EU constitution was also discussed at the summit. Did Ministers make it plain to our partners that it is the Government's view, as the Foreign Secretary has often tactfully expressed it to the House, that the constitution is dead, so that others are not tempted to try to revive a deeply flawed idea that has already been rejected by two of the founding member states of the EU? Will the Foreign Secretary now admit another of the Government's mistakes? Their lack of leadership at the time let others put forward a constitution that the Government did not really want. Will he accept that, if that mistake is not to be repeated, the Government must set out their view and their vision soon, and plainly, or others will again make the running?

Jack Straw: Let me try to rattle through that long list of questions. On Belarus, the statement of conclusions spells out that the EU will consider restrictive measures against those responsible. I cannot anticipate precisely what will be decided, but there could be a range of measures, including travel bans and asset freezes. As the right hon. Gentleman said, it is a disgrace that Belarus remains a dictatorship—the last in Europe—and it cannot continue in that way.
	On Gibraltar, both the joint statement between the Chief Minister of Gibraltar, Peter Caruana, QC, and myself—a copy of which will be in the Library—and my written ministerial statement make it clear that sovereignty remains British as long as the people of Gibraltar wish it to do so. Should they change their minds about that, which I do not anticipate for a second, the provisions of article 10 of the treaty of Utrecht would apply.
	The right hon. Gentleman asked me about a new round of talks on Iran. There are in hand arrangements that we are trying to make for a meeting of the five permanent members of the UN Security Council and Germany later this week. Of course, I will inform the House once those arrangements are firm.
	On aid and funding to Hamas, I have nothing further to add to what we discussed in First Order questions. The Quartet statement earlier in the year set out three principles that we expect Hamas to follow. At the same time—this is an issue for the whole House—we are wrestling with the need to ensure that the people of the occupied territories are not punished, by being deprived of humanitarian aid, for a vote that they freely and fairly exercised in elections that were regarded as free and fair. That is something that we have to work through.
	On economic reform, the right hon. Gentleman asked me about the comment made by my right hon. Friend the Prime Minister at the time of Lisbon. As a matter of fact, I do think that Lisbon has involved a sea change in EU thinking. It is true that the sea is very large and rather thicker than the sea that we are used to and the tanker of the EU is so big that it takes some time to turn round. However, let us take the example of better regulation. Until two or three years ago, the European Commission was simply a machine for producing more and more regulation. The right hon. Gentleman asked me about conversations that I have had with commissioners and others. I have had endless conversations. When I first got this job, I tried to have conversations about ending gold-plating in the Foreign Office and doing the same in Brussels and it was as though I had said something indecent, but these days things are changing. Under Günter Verheugen, the commissioner with responsibility for better regulation, there has been a big change. Some 68 pending items of legislation have been withdrawn. There is a rolling programme to repeal, codify, recast or modify 228 further pieces of legislation and more than 1,400 related legal acts over the next three years, and much else besides.
	On science, it is important to recognise that up until about 1997—I choose that date with care—the Government's record on investment in science was lamentable, but my recollection is that scientific investment has almost doubled since then. We will see the effect of that flowing through into research and development more widely.
	On services, the right hon. Gentleman asked me about the country of origin. It has been replaced by the country of destination principle. Personally, having considered the matter pretty carefully, I am not sure that the country of origin principle was worth dying in a ditch for and I think there are advantages to the country of destination principle. There are no proposals for an EU energy regulator and no changes to the treaty base.
	I was very tactful when I discussed our old friend the EU constitution with EU colleagues at a dinner on Thursday night. I repeated the comment that I made in the House a few weeks ago that it was, at best, in limbo. I drew attention to the fact that, at the time at which I said that, I understood that limbo could not take place until one was dead, but was not aware that His Holiness the Pope had abolished limbo in the meanwhile.

Gisela Stuart: May I take the Foreign Secretary back to what he said about the strategic energy review? Apparently it is said in Moscow that it is not so much remarkable that the EU enlarged eastwards, but that Gazprom enlarged westwards. Does he thus recognise that we must secure safety of supply and, in terms of the internal market, ensure that national cartels do not become European cartels and that there is a genuinely free market?

Jack Straw: I agree with my hon. Friend on both those points. Ensuring a broader diversity of supply was one of the summit's key conclusions on energy. She is right about national cartels. It is curious that several member states have national energy companies that are highly protective of their own market, while being atavistic when it comes to the acquisition of other energy operators in other markets. That is unacceptable and, ultimately, not in the interests of the European Union.

Michael Moore: The House is united in its condemnation of the elections in Belarus, which were a travesty of democracy, in marked contrast to the experiences next door in Ukraine. The Foreign Secretary says that the matters being considered include travel bans, but exactly how watertight will they be, given the way in which people such as Mr. Mugabe have ignored or flouted similar efforts?
	We welcome the summit's focus on research and development, universities, the gender pay gap and energy, but will the Foreign Secretary confirm that any future decisions on new nuclear power stations will remain a matter for the United Kingdom Government and not be passed off as somehow the responsibility of the European Union? Given the progress so far, how seriously does he take next year's deadline on energy market liberalisation, bearing in mind the rash of protectionism on the continent and the failures to date?
	On Friday, the Foreign Secretary described the summit as workmanlike. Given the limited steps that were taken on energy, the watered-down services directive and the limited advances on the Lisbon agenda, was not the summit actually about missed opportunities, rather than any serious work in progress?

Jack Straw: How watertight travel bans are partly depends on their exact terms, but I do not accept the hon. Gentleman's reservations about the travel bans on senior people in Zimbabwe. It is inevitable that the bans cannot prevent leaders of countries from travelling to the United Nations and other international meetings because that is required by international treaties to which all countries of the EU have signed up. We know from Zimbabwe that the bans have been both inconvenient to the leaders concerned and humiliating.
	Future decisions on nuclear power stations will remain a matter for the United Kingdom Government. As I said, there has been no change—in the absence of a treaty change there could not be—to the basis for decisions in that respect. We wanted a decision about 2007 energy liberalisation in the conclusions to test, in asense, whether European Heads of State and Government around the table were serious about that liberalisation, which is for consumers, not industrial users. It is my judgment that they are, although time will tell. Although sometimes we take three steps forward and two back, overall, including in countries with a protectionist past and present, the move is towards greater liberalisation because the benefits of that are perfectly plain to everyone.
	On my remarks about the summit being workmanlike, I have always believed in litotes, rather than hyperbole, and 35 pages of conclusions sounds to me like being workmanlike.

Denis MacShane: May I welcome the Foreign Secretary's words—and indeed, the shadow Foreign Secretary's words—on Belarus, although I would not be quite so sanguine about the election in Ukraine, where there has been a remarkable victory for old-style conservatives and oligarchs, which is always bad news anywhere in the world?
	On Belarus and, to an extent, Ukraine, is not the problem that Europe does not know how to spread and promote democracy? Will the Foreign Secretary ask one of his bright young officials in the Foreign Office to produce a paper on creating a European foundation for democracy, roughly based on the way in which the Westminster Foundation for Democracy works? There are €140 million unspent in Brussels for democracy and human rights promotion. Both the Council and the Commission are not very good at that kind of work. I invite him to see whether Europe cannot be bolder and more original in promoting democracy in its near abroad.

Jack Straw: I would pick my hon. Friend up on one thing. It does not automatically follow that just because old-style conservatives and oligarchs are elected, they have been elected undemocratically. Sometimes it is possible that the people want old-style conservatives and oligarchs. Indeed, that is the whole pitch of the Conservative party. I will follow up the request for a European foundation for democracy.

David Heathcoat-Amory: Six years ago, after the Lisbon summit, the Prime Minister specifically promised that Europe would move
	"away from heavy-handed intervention and regulation, towards a new approach based on enterprise, innovation and competition.—[Official Report, 27 March 2000; Vol. 347, c. 21.].
	However, those of us on the European Scrutiny Committee have noticed no reduction in the volume of legislation or in the appetite of the EU for more business regulations. Why should we believe the statement this time around? In particular, why does paragraph 61, announcing the better regulation initiative this time, specifically exempt the 97,000 pages of the existing rules and regulations, known as the acquis communautaire?

Jack Straw: I know that the right hon. Gentleman is a member of the European Scrutiny Committee, but my perception, from a position of some scepticism about whether the EU is moving, is that there is a real process of change. I have given some figures indicating that. The Commission is starting work on the most heavily regulated sectors—cars, waste and constructions. Other sectors—foodstuffs, cosmetics, pharmaceuticals and services—will follow.
	One example is the directive on registration, evaluation and authorisation of chemicals. Had it gone through six or seven years ago, it would have meant very heavy regulation, which would have seriously damaged the Europe-wide chemical industry. We managed to get it agreed under our presidency in a form that was acceptable to most people representing the chemical industry. My notes tell me that it led to the cost of the proposal being reduced by up to €660 million. There are other proposals, too, that are aimed at improving EU competitiveness. Things are changing.
	On the right hon. Gentleman's last point, I have had no discussion with Commissioner Verheugen to suggest that he intends to avoid the existing acquis, and nor do we.

Keith Vaz: I pay tribute to the Foreign Secretary, the Prime Minister and the Minister for Europe for their work in pushing forward the economic reform agenda. In response to Opposition Members, let me say that Lisbon was different because it set out benchmarks for the first time. The Foreign Secretary will know that, according to the Centre for European Reform, Britain has done extremely well against those benchmarks. Is he confident, however, that our European partners have learned the lessons of the Kok report, because many of them are lagging well behind on them? May I also welcome the establishment of the European Research Council and offer Leicester or Blackburn as a possible home?

Jack Straw: I cannot speak for Blackburn as Secretary of State and my hon. Friend cannot speak for Leicester as its Member of Parliament. I think that that means he speaks for Blackburn as a Member of the House, and I am very grateful to him. I will do my best to establish the ERC there.
	On the Kok report, some member states have been more resistant than others to its very clear messages. I was going to say in response to the right hon. Member for Richmond, Yorks (Mr. Hague), who spoke about economic growth and relative economic decline, that, underneath the EU averages, there is a wide variation in economic performance. That is an indicator of the policies that will work, which are basically those where there is greater liberalisation as well as good underlying investment, and those that will not work, where there is a high degree of protectionism and a lack of liberalisation in the markets.

Malcolm Rifkind: Will the Foreign Secretary show greater urgency in pressing for diversification of gas supplies? Is he aware that some 50 per cent. of Europe's gas supplies come from only three countries—Russia, Algeria and Norway—and that that is going to increase to 80 per cent. over the next 20 years? Will he take into account the fact that, as 52 per cent. of Gazprom is owned by the Russian Government, any decision by Gazprom to withhold gas from Ukraine, Moldova or any other country must be deemed to have been taken on political, not business, grounds? Will he make it clear to his Russian colleagues that as long as that continues, Russia will not be seen as a reliable partner in energy matters?

Jack Straw: The right hon. and learned Gentleman raises a very important issue. Our own gas supply is not nearly as vulnerable as that of Europe as a whole to just a handful of suppliers and Russian gas supplies are likely to account for only 5 per cent. of our supplies, compared with much higher dependency elsewhere in the European Union. However, I accept his overall point. Both the reliance on a few countries and the problems that arose between Russia and Ukraine and the rest of Europe are matters of concern. Energy security will dominate the G8 summit in St. Petersburg in the summer, and I know that my right hon. Friend the Prime Minister is very keen to secure real guarantees about energy security for the whole of Europe.

Michael Clapham: Will my right hon. Friend say more about the discussions regarding the Palestinian Legislative Council? Does he agree that Hamas, by entering into the electoral process and joining the Palestinian Legislative Council, has implicitly accepted the Oslo peace route and we need to ensure that we cautiously encourage that development?

Jack Straw: There was not, as I recall, discussion on the Palestinian situation in the summit itself. We discussed it earlier in the week, in the General Affairs and External Relations Council on Monday. We will get a better idea of Hamas's real intentions after the Arab League summit in Khartoum. If Hamas indicates that it supports, even tacitly, the proposals of the then Crown Prince Abdullah of Saudi Arabia in the Beirut declaration of three years ago, which was in favour of accepting the reality of Israel, there may be a basis for moving forward, but Hamas, as well as the European Union and the international community, has to make moves.

Bernard Jenkin: Will the Foreign Secretary give the House a modest assurance on the future of the constitution? I believe that Ministers agreed that they would discuss that again in mid-April, whether in its present form or whatever aftermath they are proposing. Does he agree that the only basis for a referendum on the EU constitution was that it represented a fundamental change and that if any such change, or part of such change, were proposed at a future mini-intergovernmental conference, a referendum would be appropriate?

Jack Straw: I am not going to anticipate a rather abstract possibility. I certainly agree that a referendum in respect of this constitution was appropriate. In the event, it has not proved necessary.

Kelvin Hopkins: My right hon. Friend will recall that the earlier proposed draft directive on services was widely opposed by trade unionists across the EU and particularly strongly opposed by major trade unions in Britain. It is very pleasing that the country of origin principle has been removed, but is the new proposal any more acceptable to trade unionists? Will he consult the TUC and British trade unionists to get their view?

Jack Straw: Yes, indeed, we shall consult British tradeunionists and the European Trade Union Confederation. Speaking from memory, I think that the current proposals, which were for a country of destination rule rather than a country of origin rule, are significantly more acceptable to the trade unions. If that turns out to be inaccurate—I do not think that it is—I shall write to my hon. Friend.

William Cash: The Foreign Secretary, like the Chancellor of the Exchequer, said that the British economy compared favourably with economies in the eurozone. Does he accept that that is despite, not because of, his policies and those of other Governments in the past? In fact, economic and monetary union and the exchange rate mechanism must be repudiated, so will he take the opportunity expressly to repudiate those policies to ensure that we can continue to govern ourselves and, indeed, repeal European legislation, as I proposed, with the support of 45 Members of Parliament, when I suggested that we repeal future European legislation and parts of the acquis communautaire to reduce the burden on business?

Jack Straw: I am sorry to disappoint the hon. Gentleman but, although he may not have spotted it, we did not join the euro, and I do not anticipate that we are likely to do so in the foreseeable future. [Hon. Members: "Ah!"] In this case, that is a long time. In any event, if there were a recommendation that we join, it would have to pass, first, the famous five tests announced on 27 October 1997 by my right hon. Friend the Chancellor, and then a referendum. The hon. Gentleman can therefore remain calm.
	On the more important point, the hon. Gentleman said that my claims about our economic progress had nothing to do with the Government. I am afraid that I disagree completely—it is to do with the Government. If, instead of advancing from the bottom of the G7 league table to second from top, we had gone the other way, he would say that that was all the Government's fault, so we are entitled to claim the credit when we go the right way.

David Curry: What steps does the right hon. Gentleman intend to take to encourage the Commission to use its extensive powers to challenge the rising tide of protectionism among companies and states in the European Union?

Jack Straw: We are doing a great deal. In fairness to President Barroso, he does not need much encouragement, as the Commission has made it clear that the rising tide of protectionism is against EU policy and law, and not remotely in the interests of the European Union. We must try to ensure that there is greater political consensus to challenge the rising tide of protectionism, which masquerades as economic patriotism.

Andrew MacKay: On Belarus, may I strongly commend the Foreign Secretary's robust objections to the behaviour of the authorities in Minsk at the weekend that resulted in innocent protesters being attacked and imprisoned? I urge him to be more hawkish and vigilant in the weeks ahead, because on many occasions we have heard that the European Union objects to a breach of human rights and promises action, but action is not taken. He will therefore understand why some of us are a little cynical.

Jack Straw: I do understand that. On Belarus, the European Union's view is strong and united, and I think that we will see action.

Philip Davies: The Foreign Secretary spoke proudly about the British sovereignty of Gibraltar, which is very welcome, but I am more concerned about the sovereignty of Britain. If he is winning the war against the over-centralising tendencies of the European Union, which powers are likely to be repatriated from the EU to this country? Many people here are sick to the back teeth of the majority of laws and rules in Britain being decided in Brussels, not Westminster.

Jack Straw: To the extent that laws and orders are decided in Brussels, not Westminster, that is because treaties were signed, not under the present Government, but under the Government whom the hon. Gentleman himself supported until 1997. If he is proposing to the House and the country that we change those treaties, let him put that proposal to his party and the people, but I think that he will get short shrift from his Front-Bench team.

Peter Bone: Since 1997, the British Government have been at the heart of Europe. Does the Foreign Secretary agree that, during those nine years, the other members of the EU have been thumbing their noses at the British Government, whether on budget contributions, common agricultural policy reform, energy reform or market liberalisation?

Jack Straw: I am sorry to disagree with the hon. Gentleman, but the answer is no. The record also disproves his point. In that period, we have been at the heart of Europe. What is more, to take one profound change, Europe has expanded. There were 15 member states when we joined the EU. There are now 25 and soon there will be 27. That is a direct result of the policy led by my right hon. Friend the Prime Minister and by the Government as a whole. It would not have happened without my right hon. Friend's commitment and that alone is helping to change the whole climate and the economic policy of the EU.

Philip Hollobone: Does the Foreign Secretary share my concern that the EU and its member states, particularly on the mainland of Europe, are not doing nearly enough to counter the vile trade of international human trafficking?

Jack Straw: Yes, I do. That is all the more reason why EU Governments, with help from the Commission, must integrate and co-operate better in their efforts to deal with that vile trade, as the hon. Gentleman describes it.

Council Tax

Phil Woolas: With permission, Madam Deputy Speaker, I would like to make a statement on council tax for 2006–07 and the action that the Government propose to take with regard to local authorities that have set excessive budgets. Figures released today show that, excluding the council tax element of the funding package for the 2012 Olympic games, the average council tax increase in England for 2006–07 is 4.2 per cent. With the council tax element of the Olympics, it is 4.5 per cent.
	We have a mature working relationship with the Local Government Association. We have worked with the LGA to look at the pressures that councils face in the next two years, and how central and local government can manage those pressures. Under the settlement for 2006–07, which the House approved on 6 February, total support for local government, including specific grants, will rise by 4.5 per cent. compared with 2005–06. That includes an extra £305 million above previous plans. The provisional settlement for 2007–08 will provide an increase of a further 5 per cent., with £508 million above that previously planned. By introducing multi-year settlements, we are enabling authorities to plan ahead more effectively in budgeting for service delivery. We have now provided a framework for authorities to deliver effective local services over the next two years that takes account of the pressures that those authorities face.
	By 2007–08, Government grant for local services will have increased by more than the rate of inflation for 10 years in succession. That represents an increase of 39 per cent. in real terms since 1997. It can be compared very favourably with a real-term reduction of 7 per cent. in the four years up to 1997. I also remind the House of the council tax support that the Government provide to those on low incomes. Indeed, 14 per cent. of total council tax is paid through council tax benefit. Nobody who is unable to pay is made to pay, and we are working to ensure that all who are eligible do claim the benefit.
	Given our significant extra investment of grant, and the continuing scope for efficiency savings, we made it very clear again this year that we expected authorities to budget prudently. It was only with the greatest reluctance, following the 12.9 per cent. rise in council tax in 2003–04, that we first made use of our reserve capping powers. However, as we said in our 2005 election manifesto, we will use capping to protect council tax payers from excessive increases. There can be no doubt that the recent, more modest increases in council tax could not have occurred without the Government making judicious use of those powers.
	When we announced the provisional settlement in December, we said that we expected the average increase in council tax in England to be less than 5 per cent. for each of the two years 2006–07 and 2007–08. I set that out in a letter to all authorities. Ministers later wrote to those authorities reported to be considering setting increases of more than 5 per cent. I also wrote jointly with my right hon. Friend the Minister for Policing, Security and Community Safety to all police authorities reaffirming the Government's expectations.
	I am pleased to report that the overwhelming majority of authorities have responded positively to our messages. Most authorities fully recognise the need to minimise the demands that they place on council tax payers. Regrettably, however, a very small number of them have set excessive budget and council tax increases, and it is for that reason that I am making a statement to the House today about the action that we propose to take.
	I should like to remind hon. Members of the provisions of the capping legislation set out in the Local Government Finance Act 1992, as amended by the Local Government Act 1999. In order to determine whether each authority's budgeted expenditure as defined in the legislation is excessive, we must compare the authority's budget requirement for 2006–07 with that of the previous year. The legislation also allows us to determine other principles, such as the level of increases in council tax.
	This year, the increase in budget requirement for authorities providing education, police and fire services is measured using the alternative notional amounts given in the "The Limitation of Council Tax and Precepts (Alternative Notional Amounts) Report (England) 2006/07", which the House approved on 6 February. Alternative notional amounts are notional figures used for capping purposes to help give a like-for-like comparison of budget requirements between years.
	Our view is that authorities' 2006–07 budgets are excessive if they show, first, an increase of more than 6 per cent. in budget requirement compared with 2005–06, and, secondly, if council tax has increased by more than 5 per cent. in the same period. As was the case in 2005–06, a single set of principles has been applied to all authorities.
	Despite the principles being more stringent than in 2005–06, when authorities' budgets were judged excessive if they showed an increase of more than 6 per cent. in budget requirement compared with 2004–05 and if council tax had increased by more than 5.5 per cent, we are proposing to take action against only two unitary authorities this year, compared with 2004–05, when we took action against 14 authorities, and 2005–06, when we took action against nine authorities. The two authorities in question are Medway borough council and York city council, which have both set excessive budgets according to the principles that I have described. We are writing to those authorities today, informing them of our decision to designate them with a view to capping them in-year, and notifying them of the maximum budget that we propose to set for them.
	The authorities have a statutory right to challenge the proposed caps, and they have 21 days in which to do so. If they want to challenge, we will carefully consider the information that we have required them to send us, along with any other representations they make, before we take final decisions. We will then either make an order, to be approved by this House, designating the authorities at the level of the proposed maximum budget or another level, or we will withdraw the designation and nominate them instead. Nomination would allow us either to set them notional budgets for 2006–07 for future capping comparisons or to cap them in advance for 2007–08.
	Two shire districts, Aylesbury Vale district council and Wellingborough borough council have also breached the limits. However, as they have done so by very small amounts—only 12p and 9p respectively in terms of band D council tax—we are not proposing to take action against them. We have always made clear our reluctance to take capping action, because these are powers of last resort and we would prefer not to have to use them, but the public have a right to be protected from excessive council tax increases.
	Under our wider localism agenda, we are giving local authorities more freedom over how they deliver services. However, that must be set within a framework of prudent financial management and value for money. The vast majority of authorities—99 per cent.—have responded well to our clear message for council tax in 2006–07, and no one would have been happier than me if the figure had been 100 per cent. However, we remain committed to taking action against those increases that we believe to be excessive.

Eric Pickles: I thank the Minister for sending me an advance copy of his statement. That is much appreciated and entirely in line with the courtesy that we have come to expect from him. I also thank him for delivering it almost a month earlier than expected. I hope that that sets a precedent and that, in future, we can see statements in plenty of time for the local elections.
	The Minister talked about the amount of extra resources that he claims to have put into local authorities. Can he put a figure on the extra burdens that have been placed on local authorities? That would be interesting to know.
	The figures released represent an 84 per cent. increase in council tax in the period since Labour came to office. From 1997 to 2006, the average council tax on band D properties has soared to £1,268—the equivalent of £106 a month. It is a measure of how great is the council tax burden that the current increase is £4 short of being the fourth largest increase that this Government have made in the course of their massive increases in council tax. The current increase is £5 more than last year's increase. The Minister can talk in terms of percentages, but £54 is a lot for a hard-working family. As the Chancellor might say, in his own inimitable way, "We have had increases of £59, £50, £49, £54, £75, £126, £65, £47 and £54, making a total increase of £579 since Labour came to power"—although he would probably have rattled through it much more quickly. That represents a considerable burden on hard-working families.
	But one section of the community faces increases of more than £54 on this year's bill—pensioners, who face an increase of £254. Where does the Minister seriously expect pensioners just above the benefit level to find an extra £254? Can he explain why the £200 pensioners' payment has mysteriously disappeared this year? Last year, when council tax had increased by £525 since 1997, the Government felt that pensioners needed extra protection. This year, it has increased by £579 since 1997, so why do they now feel that pensioners no longer require that protection? The House can only draw the conclusion that that money was a cynical election bribe.
	I have heard the Minister express concern that council tax might be a tad regressive, but are not the current figures taking his case to the extreme? When a billionaire donor to the Labour party faces an increase of £54—perhaps a bit more in other bands—and a pensioner just above the benefit level faces an increase of £253-plus, is there no better indication of the true state of the Labour party? Aneurin Bevan and Keir Hardie must be turning in their graves. This is a complete sell-out of pensioners.
	Not only did I get the statement in good time, but I have also had the benefit of the Minister's press release, courtesy of "Gallery News". In it, he makes the most extraordinary statement, which I note he did not repeat on the Floor of the House. For the benefit of colleagues, it says:
	"Labour councils are once again leading the way. Labour councils cost on average £190 less than Tory controlled councils and £96 less than Lib Dem councils."
	What is the basis for those figures? Surely they are not the discredited figures that do not take account of the relative property values of traditional Labour and Conservative authorities. Surely they are not the discredited figures that rely on Labour authorities having a lower valuation than Conservative authorities. Surely they are not the figures that no one else uses because they fail to convey a fair picture. That marvellous set of accounts and such creative accountancy show that the Minister for Local Government is wasted in his job. He should be a fundraiser for the Labour party.
	If we use the comparison on band D that the rest of the country and the House of Commons Library use, we realise that Conservative councils charge £81 a year less than Labour-controlled councils and £88 a year less than Liberal Democrat councils, despite the fact that Labour has fiddled the grant to give more money to its councils. As the independent Audit Commission put it,
	"grant redistribution . . . led to some councils putting up council tax more than others. We found a clear association between the size of grant increase a council received and their increase in council tax."
	Yet Conservative councils still manage to charge lower council tax. The figures that the Minister produced are the clearest manifestation that Labour is in retreat and being pushed into its heartland.
	The Minister made some announcements about capping. After last year's fiasco, when re-billing cost more than the money saved, he again targets minnows. Both authorities have increases in absolute terms that are below the average increase. The Minister appears to be blinded by percentages and to have forgotten that people pay in pound notes.
	In Medway, a Conservative-controlled council, this year's increase is £50, which is a 5.5 per cent. increase. That is £4 less than the average council tax increase. In York, a Liberal Democrat-controlled council, this year's increase is £49 or 5.5 per cent. That is £5 less than the average. Yet the Minister does not seem to be obsessed by percentages when it comes to his friend—and the Standard Board's friend—Mr. Ken Livingstone. The Greater London authority's increase, before the addition of the Olympic precept, is 5.5 per cent.—exactly the same figure as Medway and York.
	Medway and York are capped because they have introduced increases that are below the average. Let us contrast that with three other councils. Oldham's increase for band D is £59, that of Hartlepool is £57 and that of North Tyneside is £55. What makes those increases acceptable to the Minister? Why is the highest band D council tax in the country levied in Sedgefield, at £1,490? It has a Labour district council, a Labour county council and, at least for now, a Labour Member of Parliament. Cannot the Minister speak to that spendthrift Member and try to ensure that people in Sedgefield get a fairer deal?
	Every year, the council tax increases. Every year, despite fiddled figures and grant, and wishful figures provided by the Minister, Labour's tax burden increases and it digs itself further into a hole over council tax. In some parts of the country, Labour will face the consequences in May, but in most parts, the poor council tax payer must face those consequences.

Phil Woolas: First, I thank the hon. Gentleman for his kind initial remarks. Let me deal with his points in the order that he raised them. On extra resources, we have a mature working relationship with the Local Government Association that allows us to make a serious analysis of the pressures that councils say that they face. I have made it clear that the new burdens principle will be implemented, but on the basis of net rather than gross new burdens, and on a shared understanding and analysis of those pressures.
	We believe that the exercise leading up to the two-year settlement satisfied the Local Government Association's major recommendations, either by establishing self-funding regimes in the case of fees—particularly in regard to licensing—or by providing the extra resources that we were able to announce in the settlement. I notice that the hon. Gentleman did not welcome that extra money but, shucks, I guess I will just have to live with that.
	The hon. Gentleman said that council tax had gone up by 84 per cent. I said in my statement that the 12.9 per cent. increase some years ago had been unacceptable. It is also true that significantly more resources had been given to local councils in that period. I also mentioned the 39 per cent. real-terms increase in Government support for local authorities.
	The hon. Gentleman asked about the £200 assistance for pensioners, but he failed to mention two important points. One is that about 14 per cent. of council tax is now paid through council tax benefit, and that people on full pension credit pay no council tax at all. All right hon. and hon. Members would like to see 100 per cent. take-up of council tax benefit, and I would ask Conservative Members to join us in encouraging that take-up, as many Conservative-run local authorities already do. Secondly, the hon. Gentleman ignored the other help that pensioners receive.
	The hon. Gentleman's fifth question was about billionaires. I feel that it is only right to ask him what is the Conservatives' actual policy on a property tax. I must remind the House that this property tax—the council tax—was introduced by the Conservatives, and we all remember the circumstances in which that happened—[Interruption.] Well, I have asked before in the House about their policy on a property tax. Do they have a commitment to a property tax or do they not? They introduced the eight bands in 1991. It would be perfectly possible for them to put a proposal to Sir Michael Lyons' inquiry for an increase in the number of bands, so as to include a billionaires' band. Perhaps they should propose that, but I suspect that they will not.
	I cannot accept the hon. Gentleman's accusation that the grant system is politically biased. That is not borne out by the facts, the figures of the House of Commons Library, or the representations that have been made to the Under-Secretary of State, Office of the Deputy Prime Minister, my hon. Friend the Member for Poplar and Canning Town (Jim Fitzpatrick) and other ministerial colleagues. My hon. Friend the Member for Wigan (Mr. Turner) is not in his place, but if he were, he would be reading out statements from the special interest group of municipal authorities—SIGOMA—many of which are floor authorities. It is a bit rich of the hon. Member for Brentwood and Ongar to make such an accusation, which I deny outright. Indeed, having studied the formulae and the method of grant distribution in detail for nearly 12 months, I defy anyone to come up with a formula that would achieve what he is accusing us of doing. I reject his analysis.
	The hon. Gentleman referred to what he described as last year's "fiasco". In my view, however, there is a relationship between the decisions that we took last year on excessive budgets and council tax levels, and our success this year—and in future, no doubt—in keeping council tax levels down. I suspect that the hon. Gentleman is not quite sure whether he would prefer there to be higher council tax increases so that he could blame central Government, or lower council tax increases, for which he would no doubt give the credit to Conservative-run councils—but not Labour ones—in the forthcoming local government election campaign. He cannot have his cake and eat it, although he always tries to do so.
	The hon. Gentleman's final point related to the comparison with the Greater London authority. I repeat for the benefit of the House that the principles involved this year and last year relate not just to council tax levels but to budget requirement levels—in layperson's terms, expenditure levels—of the authorities concerned. It is important that that point is understood.

Andrew Stunell: I thank the Minister for his statement and the measured way in which he presented it, although I cannot thank him for the news that it contained.
	I am sure that the Minister recognises that yet again council tax nationally is rising by twice the rate of inflation. He will know that the Liberal Democrats believe that the tax should be scrapped, not simply fudged and tinkered with. What does he have to say to pensioners across the country who, if they were paying the average council tax last year with the £200 rebate and are now paying the new average council tax without the £200 rebate, face a 25 per cent. increase in the coming year? It is fine to cap local authorities, but does he not understand that without that rebate, pensioners, the poorest council tax payers, will be hit hardest by his and the Chancellor of the Exchequer's combined decisions?
	Should not local tax be based on ability to pay? Do not the Deputy Prime Minister and the Minister understand that the current system is fundamentally flawed and puts the poorest at a disadvantage when it comes to paying for local services? Will the Minister now speed up the Lyons review and make sure that that report comes to the House promptly, not delay its implementation until after the next general election, which would condemn the poor council tax payers of this country to another three years of this iniquitous system? He should bring it to the House with his reform ideas clearly in mind.
	When did resistance to capping and all its works, clearly and firmly expressed by the Deputy Prime Minister when in opposition, translate into the current enthusiasm for centralising and suppressing the work of local authorities? Does not the Minister see that capping is a sign of Government failure and not of Government success? Underlying all that is the byzantine grant allocation mechanism that he and his colleagues have devised. It might or might not be politically partisan, but it is certainly partisan as between central Government and local democracy, leading to higher council tax, intolerable burdens on pensioners, cuts in services and, today, the ultimate madness, capping by this Government.

Phil Woolas: I should start by congratulating the right hon. Gentleman—

Andrew Stunell: indicated dissent.

Phil Woolas: Not yet. I congratulate the hon. Gentleman on his new position and look forward to debating this important policy subject with him.
	At least the hon. Gentleman's points, in contrast to those made by the hon. Member for Brentwood and Ongar (Mr. Pickles), are based on a policy. At least he has a policy. It is an unworkable policy, and the wrong policy, but it is a policy. He says that the ability to pay should be the criterion for a local tax. We will wait to see whether such a local income tax proposal emerges from the Liberal Democrats' internal debate. He has made it clear, however, that he believes that local tax should be based on ability to pay. Of course, that ignores all those people in hard-working families, with two or more income earners, who would pay for the difference. I suspect that the "scrap the tax" campaign—indeed, I know it for a fact—does not have details of the costs of the extra local income tax.
	The hon. Gentleman asked about the timing of the Lyons review. For the sake of clarity, the Government intend to publish a White Paper on local government before the summer recess.
	The timing of the announcements by Sir Michael Lyons is a matter for him, but we expect his interim report to be published in the first half of the year, and the final report to be published by the end of the year. That is the time towards which we are working.
	The hon. Gentleman criticised what he described as a centralising Government. I suspect that he is not fully aware of the impact of the new local area agreements, which are bringing about an important change in the relationship between central and local government, and the working relationship that we have on a practical day-to-day level with the Local Government Association as we consider how best to implement the reduction in the performance regime and the extra financial freedoms and flexibilities that have been introduced. I am sure that the hon. Gentleman welcomes those, along with his Liberal Democrat colleagues on the LGA.
	The hon. Gentleman asked about pensioners. As I said earlier, some 14 per cent. of the total council tax bill is now paid through council tax benefit, and there is additional help for pensioners as well.
	The hon. Gentleman accused me, or accused the Government, of having a byzantine formula. It is not always entirely fair to cite the words of the hon. Member for Brent, East (Sarah Teather), who preceded the hon. Gentleman in his job, but she criticised me for making the formula simpler when I announced the abolition of the formula spending share.

David Laws: She is here.

Phil Woolas: If the hon. Lady is here, she can speak for herself. Anyway, I was criticised by Opposition Members for making the formula simpler. I remind the House that the formula that I have announced today is a significant simplification of its predecessor, and that it builds on simplifications introduced previously by my right hon. Friend the Deputy Prime Minister.

Several hon. Members: rose—

Madam Deputy Speaker: Order. I seek the help and co-operation of the House. I am mindful of the amount of time that Front Benchers have taken, and I see that a good many Back Benchers wish to catch my eye. I am also aware that we have important business to follow. May I therefore ask for single questions and brief replies? I may then be able to allow more Members to make contributions.

Paddy Tipping: What estimate has the Minister made of the effect of the local government pension scheme on council tax levels in 2006–07 and insubsequent years? Against the background of tomorrow's industrial action in local councils, is he still hopeful that a settlement can be found that will modernise the pension scheme?

Phil Woolas: Yes, I am hopeful, and the Government, as regulator of the scheme, stand ready to facilitate discussions between the employers represented by the LGA and the representatives of members of the scheme, the trade unions. Our policy is that the taxpayer should not be asked to pick up any additional burdens. This is a funded scheme. We have legal obligations to ensure that it is viable and, of course, legal, and we seek to do that in a way that will secure the future of the final-salary pension scheme to the benefit of all employees and of local authorities.

David Curry: The crisis in social services is bound to be made worse by the formula because of increasing demands from old people's and, indeed, young persons' services, but that must be seen in the context of the crisis in the NHS as well, owing to increasingly close links between it and social services—links that the Government and most sensible people want. What steps do the Government intend to take to ensure that those two crises do not simply play against each other and cause a steady deterioration in services, both for those who look to the NHS and for those who look to their local councils?

Phil Woolas: Of course the Government recognise—and have recognised in their joint work with the LGA—the pressures faced by social services, particularly services for adults and the elderly. It would be nonsensical to deny the existence of those pressures. But those pressures, the result of largely demographic changes, also apply to central Government, which is why our policy is to ensure that budgets are balanced. Behind the right hon. Gentleman's question is a paradox. The solution that he seems to offer is further increases in council tax, but if I were to allow them, his Front-Bench colleague, the hon. Member for Brentwood and Ongar, would no doubt be the first to criticise me. Joint work is required to deal with those very real pressures. Against the background of an increase in the revenue support grant, I must point out that the amount of money going to social services has not been cut, but increased.

David Borrow: May I raise with the Minister the impact of the capping criteria on authorities that have historically had a low council tax, or, in the case of the Lancashire police authority, a low precept? Over a number of years, it has wished to raise its precept to its expenditure and to be in the middle rather than at the bottom of the list of authorities in respect of spending, but it has been unable to do so. That will have a considerable impact over the next few years as a result of the merger of Lancashire police authority and Cumbria police authority, which has a much higher precept. Will the Minister comment on the likely impact of the capping criteria in the light of that merger?

Phil Woolas: I understand my hon. Friend's point. Lancashire police authority has, in common with others, been reasonable in setting balanced budgets. My hon. Friend's question about the impact of the merger of his police force is a matter for my right hon. Friend the Home Secretary, who will shortly take decisions on the future composition of the police. My hon. Friend's point about the historic level of the council tax having a huge impact on the way in which the precepts have been levied has also been raised by several hon. Members. One of the major reasons I took the decision to abolish the formula spending share was to allow greater transparency so that the House and the Lyons review can make decisions on the basis of facts rather than notional figures.

George Young: Would the Minister agree that the precept that he has just announced has been damaged by the Chancellor's announcement about pensioner rebate last Wednesday? Will he answer this simple question: when the Deputy Prime Minister and the Chancellor agreed the block grant figure last December, did the Chancellor have the courtesy to tell the Deputy Prime Minister that the pensioner rebate was to be abolished?

Phil Woolas: The Government take their decisions on these matters in the round. One also has to take into account the position of the Department for Work and Pensions, which funds the council tax benefit system. What cannot be dismissed is the fact that 2.5 million pensioners, representing 14 per cent. of the total council tax budget, pay their bills through council tax benefit. The hon. Member for Brentwood and Ongar cannot get away from that. As I said in my statement, no one who cannot afford to pay the council tax has to pay it.

John Hemming: The Minister will be aware that it has been Government policy since 1997 to drive up the council tax at a rate faster than inflation. When will council tax be high enough and when will the Government stop driving it up beyond the rate of inflation?

Phil Woolas: I do not accept the premise of the hon. Gentleman's question. Indeed, it provides a classic example of what I call the Liberal Democrat single transferable argument. When the council tax level is beyond what the hon. Gentleman thinks it should be and Liberal Democrats have influence in local councils, he blames the central Government; but when Liberal Democrats do not have influence in them, he blames the local councils. He cannot have his cake and eat it. The Government have increased revenue support grant to local authorities by nearly 40 per cent. In the four years from 1993 to 1997, it was cut in real terms by 7 per cent.

Andrew Murrison: What note has the Minister taken of Trowbridge town council's 48 per cent. increase in precept, which means that the precept far exceeds the district council element of the council tax bill? Does he not agree that that is simply unacceptable?

Phil Woolas: I have not received any praise—I suppose that I should not really have expected any—for my decision on Aylesbury Vale and Wellingborough. The hon. Gentleman may think that I am going to study the figures for parish and town councils, but I am not; the legislation does not cover that level. That is a matter for the hon. Gentleman's town council, which will doubtless listen to his representations.

Greg Hands: Hammersmith and Fulham council has already increased its council tax by more than 60 per cent. since 1997. Everyone knows that today's debt is tomorrow's council tax. Is the Minister aware that council debt in Hammersmith and Fulham, which stood at £297 million at the end of 2003, is scheduled to rise to £500 million by the end of 2009? That is an increase of more than £200 million over six years. Does the Minister agree that this gross irresponsibility on the part of Labour-run Hammersmith and Fulham council will cost council tax payers dearly in future?

Phil Woolas: I am grateful to the hon. Gentleman for raising that issue, but I advise him not to get into bandying about councils' debt figures. He will doubtless be on the doorsteps in the weeks to come, and I have to say what a superb and well-led council Hammersmith and Fulham is.

Mark Pritchard: What message does the Minister have for pensioners in my Shropshire constituency, given that they have just had a 4.9 per cent. council tax increase from Labour-led Telford and Wrekin council, and that they no longer have a £200 rebate? Do the Government not realise that such increases are driving many pensioners into poverty?

Phil Woolas: I thank the hon. Gentleman for raising that point again. As I said in my statement, the average council tax increases of 12.9 per cent. that took place some years ago were regrettable. However, he must accept that council tax levels are set by local authorities. Against the background of increasing resources from central Government, and of our successful relationship with the Local Government Association on net new burdens, councils have to take responsibility themselves for the level of council tax.

Peter Bone: Will the Minister explain what has changed since before the general election, when pensioners were bribed with a £200 council tax rebate?

Phil Woolas: In my statement and in previous answers, I pointed out that one has to look at support for pensioners and others on fixed incomes in the round. The hon. Gentleman ignores the fact that the pension credit, help with winter fuel payments and the council tax benefit system have helped to ensure that on the whole pensioners are better off. Through the council tax benefit system, this Government ensure that the poorest pensioners are given help and that those on full pension credit pay no council tax at all.

Philip Hollobone: The 2006–07 settlement includes an element for population growth, but it is based on census data and is then projected forward. That disadvantages local people in high-growth areas such as Kettering, which is affected by population growth in Milton Keynes and the south midlands. Will the Minister undertake to look at this anomaly for next year?

Phil Woolas: I thank the hon. Gentleman for making that point, which he has made before in this Chamber and outside it. We did of course make changes to the use of population statistics to ensure that, alongside previous trends, future projections are taken into account to a greater extent in the new settlement—in part because of the point that he makes.
	The other point I want to put on record is that the Government are entirely dependent on the Office for National Statistics for population statistics, but no doubt the hon. Gentleman, like my hon. Friends, will want to monitor the situation as the two-year settlement period pans out.

Hugh Bayley: I apologise to the Minister and to the House for being absent when the Minister made his statement. I was chairing a Standing Committee and obviously could not leave the Chair.
	I am greatly concerned that City of York council has one of the largest council tax rises this year and that it has ended up on the capping list. The cost of re-issuing bills will be extremely high and will fall on council tax payers, so would the Minister consider removing the cap if the council gave hard guarantees to cut its spending and to make a proportionate reduction in council tax next year? Would he be willing to meet me to discuss that possibility?

Phil Woolas: Of course I would be willing to meet my hon. Friend. Last year, we gave, and fulfilled, commitments to meet all councils and Members concerned about their local authorities' budgets and about council tax capping decisions. It may be helpful to my hon. Friend if I emphasise the point that local authorities have the right to appeal against the decision, and I have an obligation to give serious consideration to their representations, as well as any made by Members.

Point of Order

Liam Fox: On a point of order, Madam Deputy Speaker. Can you give me some advice and help about Defence questions, held earlier? My hon. Friend the Member for Hammersmith and Fulham (Mr. Hands) tabled a question about what recent discussions the Secretary of State for Defence had held with his US counterparts about Iran's nuclear programme. For reasons beyond my understanding, thequestion was transferred to the Foreign and Commonwealth Office, which is strange enough in itself but even more perplexing given that the Secretary of State for Defence had answered almost exactly the same question at a previous oral Defence Question Time. He was asked:
	"What assessment he has made of Iran's nuclear weapons capability; and if he will make a statement."—[Official Report, 27 February 2006; Vol. 443, c. 7.]
	It seems strange that the House was precluded from debating that important issue during Defence questions today due to that transfer by the Table Office, especially as the Secretary of State was asked what discussions he personally had held with his US counterparts at the Pentagon. Can you get us an explanation, Madam Deputy Speaker—if it is other than the fact that the Foreign Secretary has now been de-graded to the point of being the diary secretary for the Secretary of State for Defence?

Madam Deputy Speaker: I am aware of the transfer of that question, together with others, perhaps in identical terms, that appeared on the Order Paper last Thursday. The decision to transfer a question is a matter for Ministers, not for the Chair. However, decisions on transfers should be consistent; they should be made as soon as possible after tabling and quickly notified to the Member concerned. Where there is a genuine element of doubt and an oral question is involved, it is reasonable that the Member should have the benefit of that doubt. I have nothing further to add.

Identification and Support of Carers (Primary Health Care)

Barbara Keeley: I beg to move,
	That leave be given to bring in a Bill to require that general practitioners or Primary Health Care teams identify certain patients who are carers or who have a carer; to require identified carers to be referred to sources of advocacy, help and support; to require that carers' needs are taken into account in relation to the allocation of appointments, procedures for issuing prescriptions, and waiting room arrangements; to make provision for routinely checking the physical and emotional health of carers; and for connected purposes.
	Although there are 5.2 million carers, I want to focus on those who have the heaviest commitment, where caring can have an impact on the health of the carer. One million carers care for more than 50 hours a week, which is more than a full-time job. Research shows that such caring commitments often result in poor health for the carer. A Carers UK report, based on the 2001 census, showed that one in five of those caring for more than 50 hours a week were not in good health, and that figure worsened to one in four carers in some areas of the country. Areas with the worst figures for poor health among carers also tend to have high levels of disability and illness, often linked to the heritage of industrial disease. Those include my local authority areas of Salford and Wigan and many former industrial and mining areas nationwide.
	The report noted that older carers are often likely to be suffering poor health, and caring will have a further impact on the carer's health. An American study of carers of patients with stroke disease or dementia found that caring did have an impact on their health. Stress from caring affected the carer's immune system in ways that accelerated the risk of age-related diseases. The stress of caring does not just affect older carers—the Carers UK report found that carers in younger age groups, from 16 years upwards, were significantly more likely to suffer ill-health than non-carers of the same age.
	The fact that carers' health suffers through caring is well known to the charities who work to support carers. The Princess Royal Trust for Carers has some 60 centres in its network, which work with primary health care teams to help them to identify and support carers. The trust also has more than 30 projects working directly with primary care. The first projects were established in the early 1990s and that work led to the trust publishing a good practice guide for support workers and GP practices in 1999.
	In the same year, the Government's national strategy for carers noted that the NHS was
	"the single most important point of contact"
	for many carers. The Government highlighted in the strategy the fact that GPs and primary health care teams had a key role that they should be performing with carers within their practice population.
	The strategy included a five-point checklist for primary care to use with carers. The checklist covered GPs identifying carers, making checks on their physical and emotional health, telling carers that they can ask for a social services assessment of their own needs, routinely asking patients about sharing information about their health with their carer and being aware of local carers' support groups and telling carers about those groups.
	The national strategy gave that checklist to GPs as good practice for their work with carers. The emphasis on identifying carers within primary care was important because carers play such a vital role in health and social care. They are increasingly being recognised by NHS staff as partners in care. While a proportion of GPs and primary health care teams do work to identify the carers within their practice population, research on the extent of the work being done shows that this is patchy. Some GPs say that they are too busy to undertake the work. My Bill would require that primary care trusts and local health boards ensure that effective procedures exist within primary care to identify carers.
	Current good practice suggests that it is worth GPs identifying certain carers so that they can be referred to other agencies for support and for assessment of their needs. In a GP practice population of 2,000, there are likely to be some 200 carers, of whom about 40 will be caring for 50 hours or more per week. The task of identifying the 40 carers with the heaviest commitments does seem manageable.
	The Princess Royal Trust for Carers centre in Salford has a primary care liaison worker called Julia Ellis. Julia told me how two primary care practices in my constituency were successfully identifying and referring carers to her centre. Practice nurses from the Limes medical practice in Walkden carry out that work when making home visits to a patient who seems to have a carer. The nurses run through a series of questions with the patient and carer about who does certain tasks for the patient. The nurses then fill in a referral card for the practice to ensure that the primary health care team know about the carer, and they also ensure that the carer is referred to sources of advice and support.
	The Dearden avenue medical practice in my constituency has a different approach. Its staff carried out a search on the practice's computer system. For all those patients over 70 who were not in residential care homes, a letter was sent to the next of kin asking if they were the patient's carer. Out of 149 letters sent, 90 were returned from carers. That excellent response rate enabled follow-up information to be sent, telling the carer about support and information available, including having an assessment of their own needs at Salford carers centre.
	I pay tribute to the Princess Royal Trust for Carers for its work in primary care for many years in centres such as the one at Salford, and to Carers UK for their campaigns to highlight carers' issues and needs. Although I was pleased to find that GPs and primary health care teams in my constituency are tackling the work of identifying and referring carers, there is much more to be done.
	Since I became an MP, a number of constituents who are carers have asked for help with urgent problems with health services. I have found that those constituents tend not to think of themselves as carers; nor have they been identified as such by their GPs. They do not know that there is a carers centre in Salford and a carers support group in Wigan and Leigh, both of which can offer them advice and help. It seems that we have a long way to go before it is routine for carers to be identified and offered the help and support that they need.
	Carers are not yet routinely identified and referred for advice and support; nor are they helped to plan alternative care if their own health fails. Last year, Carers UK reported on the experiences of more than 1,000 carers who had to find alternative ways to manage their caring responsibilities during an emergency or health crisis. Some of those carers had life-threatening conditions themselves, but they still had a battle to find information and support.
	Carers with substantial caring commitments need to have regular checks on their own physical and emotional health. My Bill would require that carers are offered consultations and health checks and that that is done routinely for carers whose health is at risk because of caring. Carers also need to have regular reviews of how they are coping with their caring commitment in case their own health deteriorates or they stop being able to cope. They also need information on what alternative care is available, and my Bill would enable carers to be referred for such advice.
	Research has shown that carers can find it difficult to make an appointment with a GP for their own health needs, as they are more restricted in the times that they can attend and must often make alternative care arrangements. Similarly, it is difficult for them to get out of the house to pick up prescriptions. When attending an appointment with the person who is cared for, the waiting room arrangements can be a barrier for carers, particularly if the cared-for person is an autistic child, chronically or terminally ill, or suffering from dementia. Having to wait to see a GP is annoying for many people, but carers in the situations that I have described find that a wait may be impossible. My Bill would require that primary care services take carers' needs into account in making medical appointments, issuing prescriptions and making suitable arrangements in the waiting room.
	The recent White Paper, "Our health, our care, our say", offered a new deal for carers and an updated and extended national strategy. The new strategy will promote
	"the health and well-being of carers, including the particular needs of younger carers."
	I hope that Ministers will study my Bill, as a key step in offering that new deal to carers. I thank Carers UK and Luke Clements for helping me to draft the Bill and the House for giving me the opportunity to present it today.
	Question put and agreed to.
	Bill ordered to be brought in by Barbara Keeley, Dr.   Hywel Francis, Meg Hillier, Alison Seabeck, Ed Balls, Tony Baldry, Mrs. Nadine Dorries, Mr. Paul Burstow, Lady Hermon, Helen Goodman, Lynda Waltho and Ms Diana R. Johnson.

Identification and Support of Carers (Primary Health Care)

Barbara Keeley accordingly presented a Bill to require that general practitioners or Primary Health Care teams identify certain patients who are carers or who have a carer; to require identified carers to be referred to sources of advocacy, help and support; to require that carers' needs are taken into account in relation to the allocation of appointments, procedures for issuing prescriptions, and waiting room arrangements; to make provision for routinely checking the physical and emotional health of carers; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 14 July, and to be printed [Bill 154].

Orders of the Day
	 — 
	WAYS AND MEANS

Order read for resuming adjourned debate on Question [22 March].

AMENDMENT OF THE LAW

Motion made, and Question proposed,
	(1) That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
	(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
	  (a)   for zero-rating or exempting a supply, acquisition or importation;
	  (b)   for refunding an amount of tax;
	  (c)   for any relief, other than a relief that—
	  (i)   so far as it is applicable to goods, applies to goods of every description, and
	  (ii)   so far as it is applicable to services, applies to services of every description—[Mr. Gordon Brown.]
	Question again proposed.

Budget Resolutions and Economic Situation

Ruth Kelly: Today, we debate the central theme of this Labour Government's 10th Budget: education—our No. 1 priority. Our vision is for a nation that is both economically successful and socially just, where everyone has the opportunity to fulfil their potential, no matter who they are or where they come from. Education is central to that vision. It has the potential to transform our lives, individually and collectively. It is a powerful force for both economic success and social mobility, which is why Labour values it so highly and debates it so passionately.
	In last week's Budget, we had to make a choice—we could invest in our children, schools and young people or we could put tax cuts before the needs of our young people. We chose to invest in the future and in our economy, leaving the Opposition to make the case for the old Tory politics of cutting public services to pay for tax cuts. The prosperity of our nation requires a Government who are not only strong enough to take the difficult decisions for today, but who have the vision and determination to take the essential decisions needed fortomorrow. Since taking office in 1997, this Government have never failed to meet that challenge, making the case for reform in our education system where it was needed, but also backing that reform with investment.
	The priority of this Labour Government is to pursue our vision, in which an outstanding education will be the right not only of a few pupils who have opted out of the state system or whose parents benefited from a good start in life, but of every single child—100 per cent. of our children will be valued highly; 100 per cent. will be fully equipped for the challenges of the future. Because we want every child to have the chance to succeed, schools were at the heart of last week's Budget. The Government have already raised standards in primary and secondary education. There has been unprecedented capital investment since 1997. There are 30,000 more teachers and more than 130,000 more support staff in our schools, and there have been year-on-year improvements in results at ages 11 and 14 and at GSCE. Where only 45 per cent. of pupils got five good GCSEs in 1997, 56 per cent. achieved that level in 2005.
	The Education and Inspections Bill currently before the House takes that transformation of schools further still. Schools will be able to take the decisions that they need to raise standards and will be free to form relationships with external partners, such as business foundations, further education colleges and universities, charities and other schools, where that will help them to drive up standards. For the first time ever in our nation's history, we are introducing a new right for all young people to a high quality vocational route from the age of 14.
	The Budget heralds more major investment for our schools. We have already doubled the money that we spend on each pupil each year from £2,500 in 1997 to £5,000 today, but we know that, in the independent sector, average spending on each pupil is still £8,000 each year. As the Chancellor has made clear, our long-term aim will be to close the gap between spending on private school pupils and those in state schools. We want all pupils to benefit from the investment and support now available to only some of them. In particular, as a first step the Budget includes capital investment in school buildings and information and communications technology, which will increase by £1.6 billion to a total of more than £8 billion by 2010–11. That will close the historical gap in capital investment between state schools and independent schools so that all our young people can benefit from world-class educational facilities.

John Bercow: The right hon. Lady said a moment ago that the Government have committed themselves—true enough, they have—to a right to a vocational education, including, therefore, a commitment to access the specialised diplomas that will form its essence. Why are the Government not prepared similarly to commit to the funding of personalised learning?

Ruth Kelly: The hon. Gentleman makes an extremely good point. I want to come on to personalisation, because it is at the heart of our education reforms. The Budget commits the Government to spending £220 million next year, followed by £365 million the following year direct to every head teacher to help to provide tailored teaching and learning in and out of the classroom.

Michael Connarty: My right hon. Friend is moving on to an interesting topic, but I want to return to the previous topic of capital investment. Has she analysed the distortion caused by forcing local authorities to have academies? On at least two occasions, I have heard my colleagues say that their local authority has been told that if it will not have an academy, its capital investment programme will be put back by two or three years.

Ruth Kelly: I would be glad if my hon. Friend provided the evidence for that. I would be happy to look at it. The Government's commitment is to raising standards. When a local education authority has a plan that will clearly raise standards, particularly in underperforming or failing schools, the Government welcome that. When it does not, an academy may be the option—when there is persistent educational inequality and disadvantage, which sometimes will have existed for generations.

David Chaytor: On the previous point about matching the funding in state schools to that which currently applies in private schools, will my right hon. Friend indicate the time over which that objective could be achieved? Does she think that it can be achieved entirely out of general taxation?

Ruth Kelly: As usual, my hon. Friend makes a salient point. I have just laid before the House detailed, concrete commitments on capital investment, which, as a first step, will help to close the gap—and, in fact, close it—between private sector capital investment spending today and our ambition for capital spending on state schools. Clearly, there are also revenue implications. As he knows, we do not, in general, set out our revenue plans beyond the period of the comprehensive spending review, but we have given a commitment for the next two years to invest heavily in personalised education, out of general taxation, so that every child can benefit from more catch-up support, more individual teaching, more small group and one-to-one support—particularly for those falling behind—and additional activities for the most able. I am talking about personalised provision, with pupils from the most disadvantaged backgrounds as the first priority. Combined with the investment already allocated in last autumn's schools White Paper, we have now given a total of £1 billion to support that approach to individual teaching and learning.

Barry Sheerman: I may have misheard my right hon. Friend, but, from reading the vast amount of documentation that we have had since the Chancellor's Budget speech, I understand that the figure that she gave is the added amount that the Chancellor announced. When combined with the amount already being spent, the figure is much larger, is it not?

Ruth Kelly: My hon. Friend is absolutely right. The amounts that I have just outlined are in addition to the amount for personalisation already allocated through the direct schools grant. That brings the total over the next two years—just for personalised learning—to more than £1 billion. As he will know, last week I asked Christine Gilbert, the chief executive of Tower Hamlets council, to lead an expert review team to investigate how we can take forward the vision for outstanding, tailored teaching and learning. Her report, which is due towards the end of the year, will set out a vision for the next generation—teaching and learning in 2020.
	As the Chancellor said last week, investment in schools is the most important and pivotal investment that we can make for our economy and our future. However, I am disappointed to tell the House that on the central issue in British politics today, the Conservatives have failed to rise to the challenge. They have never been prepared to make the investment that is necessary for every child and for the nation's future prosperity, and now they are unable to make up their minds whether to back the investment announced in the Budget. I am delighted to see the shadow Chief Secretary to the Treasury, the hon. Member for Chipping Barnet (Mrs. Villiers) on the Front Bench, waiting to hear what I am going to say. On Budget day, when she was asked whether the Conservatives, in government, would spend less on education, she said, "Um. Ah. Certainly." Under pressure, talking about Tory cuts, she added:
	"undoubtedly that could be a possibility".
	However, later that night on "Newsnight", the shadow Chancellor—who might just be waking up to the fact that more investment in schools is needed and vital for our country's future prosperity, and that his party might also need to be back on the centre ground in British politics—said he would happily back our plans for investment in education. That is a party in chaos—yet another flip-flop.

Richard Spring: As the Secretary of State is being party political, may I remind her that one of the Government's key promises in 1997 was that class sizes in primary schools would be under 30? However, by 2001 that key pledge was abandoned and has thus not been met. Any aspiration must be matched against the reality of what the Government say and what they do not deliver.

Ruth Kelly: The hon. Gentleman is talking complete rubbish. Our party's election manifesto in 1997 said clearly that for every five, six and seven-year-old, class sizes would have a cap of 30. Not only have we delivered that pledge in government, but we continue to invest in teachers and support staff to reduce class sizes. Once again the Conservative party is failing to prove itself to be a credible party of opposition when we discuss education.

John Bercow: rose—

Ruth Kelly: I will give way to the hon. Gentleman, who I know will talk fluently and at length on the issue.

John Bercow: I will not talk at length because I do not suppose that I shall be allowed to do so, Madam Deputy Speaker.
	The right hon. Lady has made it clear that she wants to focus on the most disadvantaged young people and, clearly, specificity is of the essence. Given that children in young offenders institutions are receiving on average only eight hours education a week, and that in the interests of both reducing recidivism and increasing opportunity for those disadvantaged young people we need to do better, what specific financial commitment is she making to increase provision for them?

Madam Deputy Speaker: Order. The hon. Gentleman might not have thought that that was long, but I certainly did.

Ruth Kelly: I am delighted that I gave way to the hon. Member for Buckingham (John Bercow) because he makes an extremely important point. If we are to reduce recidivism, we need to invest in offender learning. I draw the attention of the hon. Gentleman's colleagues and the House to the Green Paper that we recently published on reducing reoffending through skills and employment. We outlined in the Green Paper our commitments and the fact that the eight hours that are provided to offenders need to be increased in both volume and quality to ensure that all offenders learn the skills that they need to get a job after leaving the institution. As the hon. Gentleman knows, the Government take that extremely seriously.
	On the point about flip-flops that I was addressing, I thought for a moment that the Tory policy on vouchers to subsidise private education had been scrapped. However, I am now not quite so sure because just the other day, when browsing the net on my personal computer, I came across an interview on Mumsnet with a certain David Cameron, or Dave. Dave said that he wanted
	"public money spent on private independent schools"—
	that sounds like vouchers to me. It is anything to anyone. I urge anyone in the House who is interested to visit www.flip-flop.com.
	Schools are at the heart of our vision for a world-class education system, but they are only one part of it.

Peter Luff: Will the Secretary of State give way?

Ruth Kelly: I am now dealing with further education. If the hon. Gentleman wants to discuss further education, I will be glad to take his intervention—[Interruption.] I have moved on.

David Willetts: rose—

Ruth Kelly: I will, of course, give way to the hon. Gentleman.

David Willetts: Before the Secretary of State moves on from schools, may I ask her about a matter that is of great concern to many parents? What assessment has she made of the effect on schools of the strike action that is planned tomorrow? We have heard of at least one London borough that expects a quarter of its schools to close. Will she join me in condemning any strike action that affects the most vulnerable people in the community, including, for example, children with special educational needs who will not be taken to their schools?

Ruth Kelly: Clearly, schools must make decisions on health and safety grounds that are right for their staff and pupils. I urge any staff involved to think seriously about the consequences for schools, especially those that serve special needs children.
	Our schools are at the heart of our vision for a world-class education system, but they are only one part of it. Labour Members are clear that further education is also crucial. It is the real engine of social mobility in this country. It gives a second chance to those who missed out at school and helps people to build new careers. It enables those stuck in unfulfilling jobs to retrain so that they can get on.
	Today, I have published a White Paper on the future of further education. It sets out an ambitious programme of investment and reform and gives the college sector the status and attention it deserves. The Government have chosen to invest in the college sector, just as we have in our schools. Since 1997, there has been a 48 per cent. real-terms increase in investment. An additional £350 million of capital over two years for colleges was announced in last year's Budget, and new resources are set out in this year's Budget and today's White Paper.
	Labour Members have an ambitious programme of investment for our colleges—we have made our choice. The investment that we have already delivered has paid off. More people are joining FE courses—6 million now compared with 4 million in 1997—and more young people and adults are starting and completing good qualifications every year. However, we face unprecedented challenges, so we must do much more. Our post-16 staying-on rate is one of the worst in the industrialised world, and we need to transform the skills of adults if we are to remain competitive in the new globalised economy, with new players such as India and China becoming more powerful every day. Standing still is simply not an option.
	I want to see all young people in education or training. I want all adults to be able to continue to learn new and valuable skills and all employers to fulfil their responsibilities to train their work forces. Today's White Paper will make a reality of those ambitions. There will be £25 million to fund a new entitlement to a free first level 3 qualification for all 19 to 25-year-olds, together with an extra £11 million to provide maintenance support to help with living costs. There will be £11 million to help colleges to improve their work force by recruiting mid-career professionals from industry and top-flight graduates. There will be £20 million to address the issues identified by the women and work commission in facing up to the scandal of unequal pay.

Patrick McFadden: I absolutely agree with the Secretary of State about the importance of the White Paper that was published today. One of its elements is the return of learning accounts. When the policy was in practice before, it was affected by the severe problem of fraud, which led to a loss of confidence in the accounts. Will she set out what difference there will be between the learning accounts to which the White Paper refers and those that existed in the past?

Ruth Kelly: My hon. Friend makes an important point. It is right that funds are in the hands of individuals so that they can access the courses that they think best meet their needs. The vision of a demand-led system—by both individuals and employers—is at the heart of our approach for the further education sector. Clearly, the individual learning account experience was subject to fraud, and we learned lessons from the Select Committee inquiry into that. In future, all courses will have to be quality assured. A register of quality-assured providers will ensure that it is not possible to defraud the system. At first, the new accounts will be available only for level 3 courses, rather than all courses, and we will pilot the approach carefully before extending it across the country. If, as I think we will, we develop a watertight system that puts power in the hands of the individual, we will move towards a further education system that is in general much more responsive to individual need and demand and that helps us to meet the skills challenges of the future.
	We will not only put more power into the hands of the individual in the further education sector, but we will ask colleges to be more responsive to employers. I would like to see courses that are chosen by employers and delivered in the workplace so that companies can access all their training needs, from adult literacy to degree-level engineering, in a convenient and timely way. All colleges will be asked to specialise in their strong areas so that they all have a real centre of excellence. We will raise the bar on standards by taking tough measures to improve colleges that are underperforming. This is a radical package for the further education sector, and it is a Labour package. This is a Budget that secures fairness for every child and every learner by investing in every child and every learner. The Conservatives had the chance to invest in the further education sector when they were in government, but did they? No. In fact, funding was cut by 14 per cent. in real terms under the previous Government.

Nadine Dorries: If the Secretary of State thinks that the reforms were so desperately needed and so important, why has it taken the Government nine years to introduce them?

Ruth Kelly: Why has it taken the Conservative party nine years to wake up to the fact that more investment might be needed in our schools and further education colleges? Over the past nine years, funding in education has risen by 48 per cent.—almost half—in real terms. At the same time, we have introduced a new level 2 entitlement for all young learners and an entitlement for adults who do not have the basic skills required, to gain them for free. We are also piloting a new approach to level 3 in the regions. The White Paper relates to colleges that are needed to deliver the skills needs of the nation.

Peter Luff: Does the right hon. Lady think that perhaps the time has come for a more radical assessment of the relative roles of higher education and further education? The overlap is now considerable. The message of a 50 per cent. target for HE seems to diminish the value that the Government attach to FE. Is the White Paper radical enough to address the skills needs of our country?

Ruth Kelly: I think that it is. When the hon. Gentleman has a chance to read the White Paper, he will see that we plan to use FE colleges as a major way of delivering HE for those learners who are already in employment and need skills delivered in the workplace, and for those areas where students and employees do not have ready access to HE institutions. That is right and it will help us to achieve our target. If anything, the target of 50 per cent. is too low an ambition rather than too high an ambition.

Barry Sheerman: Before my right hon. Friend leaves the subject of FE, may I congratulate her on the White Paper? The reasonably broadminded coalition on both sides of the House would no doubt congratulate her on the quality of the recommendations. However, does she think that there is a problem with rebuilding and refurbishing the FE sector estate? She knows about the serious financial problems with borrowing the money in the FE sector. I have not been able to find anything in the document to put that matter to rest.

Ruth Kelly: I agree that the sector needs more capital investment, and capital spending in the FE sector will rise by £1 billion over the next five years, £350 million of which was announced as additional investment in last year's Budget. My hon. Friend is also right that the FE sector finds it difficult to compete on the same terms as schools for 14 to 19 education in particular. When he examines the White Paper closely, he will see that we are planning to level the playing field and make things fairer between schools and the FE sector, and sixth-form colleges in particular, in the approach to 14 to 19 capital, with local authorities in the lead, delivering their vision for capital spending across that age group. I hope that he accepts and recognises that that is a major step forward for capital investment in the FE sector.

John Bercow: On employer involvement, in the formulation of the content of the specialised diplomas, how will the right hon. Lady decide which employers to consult, by what means and over what period?

Ruth Kelly: Again, the hon. Gentleman makes the important point that employers in each sector should be intimately involved, not only in delivering part of the diploma, but in designing the curriculum content. That is why I have asked every sector skills council, which the Government have set up in every major area of the economy, to lead in bringing together a partnership of those interested employers to agree the content of each and every one of those specialised diplomas. By 2013, every young person in the country over the age of 14 will have the choice of learning on one of those 14 specialised diplomas, to which he so rightly referred—bold thinking, but the need for much higher quality and better vocational education is clear. If we are to compete against China and India, we need to invest in engineering and other major parts of the economy.
	In proposing our reforms, we have always been clear that they need to be backed up with investment. We have done that against a backdrop of an Opposition whose policy on investment is in complete disarray. The Conservative party refuses to match the investment that we are putting into our education system. I ask the hon. Member for Havant (Mr. Willetts) to contradict me if what I am saying is not true. It is a party that yet again puts tax cuts before the investment that is needed in our nation's future.

Michael Connarty: My right hon. Friend may be coming to this, but it is worth making the comparisons in concrete terms for the House and the record. My understanding of education spending trends is that between 1992–93 and 1997, the percentage of gross domestic product spent on education fell from 5.4 to 4.7 per cent. under the Conservatives. In the period in which Labour has been in office, it went up to 5.6 per cent. by 2004–05. What is the percentage aim in this Budget, and where will education fit in in the GDP of this country?

Ruth Kelly: My hon. Friend makes a compelling point. It is true that when the Conservatives had the chance, they cut investment in education. Not only that, in their most recent manifesto of 2005, they did not mention skills. Those did not get a look-in.
	My hon. Friend asks about our ambition for the future. As he knows, it is to match spending in the state sector with spending in the private sector. Over the course of this Parliament, we have said that we intend to continue to raise the proportion of GDP that is spent on education. We have also said that by 2010–11 we will have fulfilled the ambition on the capital side. We have gone much further than the Conservatives in outlining our plans for the future. We are putting no limits on the ambition that we have for our children or for ourselves as a nation.
	We are making the hard choices now for stability and prosperity in the future. There is investment and reform for today and tomorrow, and aspiration and achievement for all. This is a bold and progressive Budget, and I commend it to the House.

David Willetts: As we are debating the Budget, I draw the House's attention to my entry in the Register of Members' Interests.
	I want to focus on education, and I ask the Secretary of State when the decision was taken to put it at the centre of the Budget. Of course we welcome the fact that it is centre stage, but one suspects that the Government thought that they would like to do health, but that was a bit too embarrassing, so they then thought they would like to do pensions, but that was too difficult. It seems that by a process of elimination they eventually decided that education had better be the theme.
	We welcome the announcements on extra expenditure on education in so far as we understand them. I had hoped that we might know a bit more about the detail after the Secretary of State's speech, but, sadly, we do not. Although we welcome the extra spending, it has to be accompanied by reform. To secure the advantage of the extra expenditure, there has to be real reform of public services.
	It was striking that in the Budget speech last week, the Chancellor spoke a lot about education and education spending, but he never once mentioned the Education and Inspections Bill, which was supposed to represent the pivotal moment when the Government committed themselves to serious reform of education. He offered spending without any commitment to the reforms on which the House had voted only a few days earlier. One might have expected him to show at least a little bit of gratitude to Opposition Members for having helped him to secure those reforms.

Patrick McFadden: The hon. Gentleman says that he welcomes the new investment in education. Will he clear up the Conservative party's position on the goal of matching investment per pupil in the state sector with investment in the private sector? Does he support that?

David Willetts: Yes, I will turn to that in a moment. I shall try to go through all the different announcements that we have had from the Chancellor and the Secretary of State for Education and Skills and clarify what each of them means.
	First, there is the increase in expenditure next year. Although this was not said by the Chancellor in the House, the Red Book says, and the Secretary of State confirmed just now, that the additional resources of £220 million and £365 million are
	"to provide further support for personalisation in schools in England."
	How will the Secretary of State ensure that that money is spent on personalisation? Will she put conditions on it? What if a head teacher who receives the money decides that there is another priority for his or her school? Will the Secretary of State require the money to be spent on personalisation, and if so, how is she going to do that?
	For Budget after Budget we have had announcements of specific pots of money attached to specific purposes, but never an explanation of why the priority in question has been chosen. I remember, for example, the Chancellor announcing in the 1999 Budget debate £2,000 for every school to buy books, saying that it would lead to a total of 10 million new books in all. I never knew how the Department was going to ensure that those 10 million new books arrived. I do not know whether it set any conditions or followed the matter up. I would just like to know from the Secretary of State exactly how she is going to ensure that this money is spent on personalisation, or whether this is a pretence in which we are all supposed to share, whereas in reality it is a cheque for the school—and a good thing, too—but nobody will inquire how the head teacher has spent the money. Conservative Members trust head teachers, and we have no desire to set conditions on the money that will go to schools as a result of this announcement.

Bernard Jenkin: I congratulate my hon. Friend on the fact that from where I sit, the Secretary of State appears a trifle rouged. Is not the whole point of trust schools the fact that they control their own resources, and should not be micro-managed by the Secretary of State? Will my hon. Friend endorse that point?

David Willetts: I completely agree with my hon. Friend. Conservative Members trust schools—that is why we voted for trust schools, although of course it is a policy that dares not speak its name. It did not even appear in the Education and Inspections Bill, but anyway we backed it, because we believe in giving schools more freedom. If that is the philosophy that the Secretary of State claims she now believes in, why does she have to set conditions on the money that she is sending to schools? Is that consistent with the view of education that lies behind the Bill for which Conservative Members were happy to vote?

Several hon. Members: rose—

David Willetts: I had better give way to the Chairman of the Select Committee.

Barry Sheerman: The hon. Gentleman trusts head teachers, and so do I, but we would both be concerned if there was not a balance in these matters and, for example, money flowing to schools for special educational needs was not used for that purpose.

David Willetts: Yes, but I am trying to establish what conditions, if any, will be set. Head teachers around the country, who heard this announcement last week, would like to know how much flexibility they are to have in spending the money, and on that, I am afraid, Government Members remain silent.

Michael Connarty: I hope that the hon. Gentleman will clarify that point, because I am sure that the record will show that he has just contradicted himself. First he demanded of the Secretary of State the terms on which the money given for personalisation will be followed through and delivered, then he seemed to say to the hon. Member for North Essex (Mr. Jenkin) that he did not agree with personalisation and that the money should be spent in any way the head teacher wishes, not on personalisation. Is he for or against personalisation?

David Willetts: Pay attention at the back of class! It is very simple: Conservative Members do not believe in attaching strings to the money. However, we particularly dislike fake announcements, such as when the Chancellor says, "I've got £2,000 for school books," or "I have £200 million for personalisation," and everybody is supposed to conspire in the pretence that the money has a special purpose, when the Department makes no effort whatever to set any conditions.
	All I am trying to do, for the sake of establishing the position of head teachers throughout the country, is find out whether any conditions will really be set. I hope that they will not be, in which case the Secretary of State should stop pretending that this money is attached to whatever is the hot policy area of the moment. I hope that that is totally clear.

Peter Luff: I hope that my hon. Friend will not let the Secretary of State off the hook on this important point. Paragraph 6.58 of the Red Book talks about the money being targeted towards schools with "high levels of deprivation". If that is the mechanism used to distribute the funding, it looks as if it will contribute to the ever widening gap between schools in Worcestershire and schools in Birmingham, for example. We need an answer to that question.

David Willetts: My hon. Friend is quite right. It would be helpful to have a bit more information about how the money is to be distributed and what conditions are to be set for it. We look forward to receiving that information as a matter of urgency. I had rather hoped that we would hear more about it today.

David Chaytor: Will the hon. Gentleman give way?

David Willetts: The hon. Gentleman is a member of the Select Committee, so I will give way to him and then try to make a little progress.

David Chaytor: I am grateful. If the hon. Gentleman is so strong in his belief that head teachers need greater freedoms, how does he defend his policy on setting, whereby he insists on prescribing to head teachers exactly how they should organise the teaching in their schools?

David Willetts: I thought that in all parts of the House there was some support for setting as part of what is called personalisation. I am asking whether the extra money that will go to schools is supposed to be spent on personalisation, and if the Government claim that it is for personalisation, how they will set conditions on how it is spent.
	I turn now to the medium-term proposal on capital expenditure. We are a bit baffled as to exactly what is going on here. Perhaps the Secretary of State could help us. She was Economic Secretary to the Treasury, and before that an economics journalist, so if anybody can enlighten us, it is her. As I understand it, we have been told that we are to have a total of £34 billion of capital expenditure over five years, which we welcome. We have been told that the money will rise from £5.6 billion this year to £8 billion in five years, but for some reason we are not to be provided with the crucial information on how the money will be broken down over that period, which schools and people planning capital expenditure need if they are going to get proper value from it.
	There are a limited number of ways in which one can spend sums that start at £5.6 billion, end up as £8 billion and add up to £34 billion, so why does the Secretary of State keep the House in suspense? Why does she not fill in the gaps, so that schools and people who wish to help finance capital spending in schools can do some serious planning? That would be very helpful for many people who care about the quality of education. Again, if she wishes to intervene, I would welcome further information.
	The last of the Secretary of State's three announcements on spending is the figure for the long term—the proposals for increasing expenditure to reach the level in the private sector. When I heard the Chancellor announce that in his speech the other day, I thought that I had heard it before. Indeed, what do we find but that in 2001 the Prime Minister, speaking at the conference of the Association of Teachers and Lecturers, said that his aim was
	"to get to the situation where we have a state education system that is as good in its facilities and its investment as the independent sector"?
	When asked what that meant, a senior Government source—for all we know it was the hon. Member for Wolverhampton, South-East (Mr. McFadden), who I think was then one of these advisers, and an expert in the black arts—said:
	"The prime minister was indicating that as we continue with real-term, year-on-year spending in state schools, we would hope to narrow the gap with the independent sector."
	In 2001 the gap in spending between the state sector and the private sector was approximately £2,000 per pupil a year. In the five years since the Prime Minister made that pledge, the gap has widened to £3,000. Now that the Chancellor has turned up and repeated what the Prime Minister said five years ago, we are rather interested to know why the Government should do any better this time than they did when they made the announcement last time.
	Of course we want the gap to be bridged and we want to see that level of expenditure, but it is hard for us to judge how the Government are setting about achieving it. One possibility—although I would never suspect the Secretary of State of such cynicism—is that we simply take today's expenditure on education as a percentage of GDP and project it forward, and there comes a point at which simply by holding expenditure constant as a percentage of GDP, it eventually reaches £8,000 per pupil per year. In fact, on our calculation that happens shortly after 2020, so perhaps the Government expect it to happen shortly after 2020. Indeed, in his briefings on the Budget, the hon. Member for Normanton (Ed Balls) gave 2020 as one of the dates when the target would be achieved.
	That aspiration is in reality a forecast, and the Government need do nothing other than keep public spending on education at today's level. The Secretary of State may tell us otherwise, and if so, I would very much welcome that. How does she intend to achieve that aspiration, and over what time scale? We are happy to sign up to such an aspiration, but while the Government talk only about inputs, spending and ratios, we want standards in state schools to reach the standards in private schools. That is what parents care about most, and that is how we should approach the objective that has been set.
	When the Secretary of State and the Chancellor reflect on these matters they ought to take careful account of the wise advice in successive reports by the Education and Skills Committee. In two separate reports on public expenditure it has issued salutary warnings that the Chancellor and the Secretary of State have not taken fully into account. Its report on public expenditure on education and skills for the Session 2004–05 begins with a crucial paragraph entitled "The effectiveness of increased expenditure", which states:
	"The Chancellor's budget book for 2004 claimed a direct relationship between the increased investment in education since 1997 and improvement in GCSE results in particular. Our evidence showed that with lower levels of investment"—
	that is something of which the Opposition are accused—
	"GCSE results had improved to at least the same extent in earlier periods in the 1990s."
	We therefore secured similar improvements.
	The report continues:
	"The Government needs to take great care in making claims about the effectiveness of increased investment in education in increasing levels of achievement which the evidence cannot be proved to support. Links between expenditure and outcome remain difficult to establish."
	That is extremely wise advice. When the Prime Minister said that he was going to focus on outputs, not inputs, we thought that that was part of what new Labour was supposed to be about. However, what we heard from the Chancellor last week and the Secretary of State this afternoon was entirely about inputs, not outputs. Why did the right hon. Lady not take to heart the advice in the Select Committee report?
	The Select Committee returned to the subject a year later and, importantly, warned the world of education that the rate of growth of education spending would slow down. Its 2006 report on public expenditure on education and skills opens by making the point that the Government
	"sets great store by stability of funding; it needs to ensure that budget holders across the education sector are aware that funding will not rise at a significant rate over the next spending review period and beyond."
	It is great to see the hon. Member for Huddersfield (Mr. Sheerman), the Committee Chairman, in the Chamber. Paragraph 15 of the report goes on to say:
	"The Government has already accepted that spending increases will be more modest in the years ahead. The DfES needs to be explicit in stating that growth in expenditure on education and skills will slow down significantly in the coming period. For schools that may mean growth of 2–3% a year in cash terms compared to 5–7% growth in recent years."
	The Select Committee rightly called for a grown-up debate so that people who work in education can accept that the rate of growth of education spending will slow down a great deal.
	That was extremely important advice, but last week the Chancellor and the Secretary of State, who has talked about a "huge new resource", painted a picture for people in the world of education that is very different from the reality set out soberly and frankly in the Select Committee report. I would be happy to join the Secretary of State in a grown-up debate about how, if the rate of growth of spending is to slow down, that money can be used most efficiently to raise standards in education.
	Instead of following the Select Committee report, the Government have bandied figures about as if there is there is going to be an extraordinary splurge in public spending. The figures show that the rate of growth of public spending will not be as great in the next few years as it has been in the past few years. It would have been grown-up to follow the Select Committee advice and confront the world of education with that reality, rather than try to avoid it. The Chancellor frequently enjoys accusing us of boom and bust in our management of the economy, but the record shows that in the financing of public services the Government are responsible for a cycle of boom and bust.
	May I invite the Secretary of State to focus on science—a subject to which the Chancellor referred in the Budget? The state of science is a subject of widespread concern, and something that worries Members on both sides of the House. Specific science initiatives were launched which, in so far as we can understand them and the figures behind them, we welcome. However, I hope that the Secretary of State will forgive our scepticism about the special schemes that are always being announced.
	During the election campaign, less than a year ago, the Prime Minister said on 14 April 2005:
	"Today we pledge an important new element in this knowledge investment—a £250 million three year programme for England to renovate or build at least one new science lab in every secondary school in the country, to give a further boost to school science and to give all schools new facilities even if they are not scheduled for early complete refurbishment for the longer-term capital programmes."
	During the election campaign, £250 million over three years was promised for science labs. Ever since, people have tried to obtain information about that £250 million programme and what is supposed to be happening. Finally, Lord Sainsbury sent a letter to John Dunford last month that made it clear that there was no special £250 million fund whatsoever. Instead, Lord Sainsbury said that
	"the Office of Science and Technology and the DfES will be undertaking a pilot project to build a demonstrator school science lab."
	If that is what happened to the £250 million scheme lastyear, why should we have any faith in the announcements that the Government have made this year?

Nadine Dorries: Over the past five years many science departments in universities have closed, and the largest proportion of science students are from the independent sector, so the position is far worse than my hon. Friend suggested. There is little point investing in science labs in the state sector, because there is nowhere for those students to study science if they obtain qualifications.

David Willetts: I agree, and I hope that when the Financial Secretary to the Treasury makes his winding-up speech, we will obtain an authoritative statement about what happened to the £250 million that was announced during the election. I am afraid, however, that we must leave the judgment to John Dunford, the general secretary of the Association of School and College Leaders, who said:
	"During the election campaign, the DTI announced out of the blue that it was putting £250 million into improving school science labs. After repeated requests to the DfES and DTI, we have at last discovered, as we feared, that this money does not exist."
	If that is not the case, I hope that the Financial Secretary will set the record straight.

Ian Gibson: Is the hon. Gentleman aware that the Government, with Wellcome Trust money, have renewed and rebuilt laboratories, and have also built new laboratories in every university in the county? Has he visited a university that does not have a huge amount of building under way? His constituency may be a bad example, but in my constituency of Norwich, North, five science labs have been built in schools, and I have opened every one.

David Willetts: I am pleased that that has happened in the hon. Gentleman's schools, but we have still not received an authoritative answer to the question of whether we should take seriously the pledge made by the Prime Minister during the election.

John Bercow: Again, we need to focus on outputs, not merely on inputs. As the Organisation for Economic Co-operation and Development's international student assessment shows that the United Kingdom has fallen from fourth to 11th in the international league table for science, ought we not to be told by the Government why?

David Willetts: My hon. Friend is right. I was hoping to ask the Secretary of State for a little more information about what she was doing to tackle that. I intended to devote a section of my speech to the 3,000 new science teachers mentioned in the Chancellor's Budget statement, but not mentioned in the Red Book. Perhaps we will hear more about them in the winding-up speech.
	I turn to the subject of further education, about which the Secretary of State spoke and on which we have had a White Paper today. I agree with the right hon. Lady about the importance of FE. I served on the governing body of an FE college for six years, after it was incorporated. Many FE colleges greatly welcomed incorporation, although I fear that the present direction of policy is slowly and insidiously to take away many of the freedoms that FE colleges had an opportunity to seize then.
	FE has rightly been described as sometimes being the middle child in the world of education, which does not get the attention that it merits, between schools and higher education. Sir Andrew Foster's report on FE was excellent. I hope the Secretary of State will agree that if we ever want to assess the Government's performance when it comes to opening up skills and opportunities for our young people, nothing beats table D4 of Labour Market Trends. That says it all. I shall give some edited highlights.
	The table is entitled "Economic Activity and Economic Inactivity", broken down by age. It shows that among 16 and 17-year-olds, 95,000 are unemployed and not in full-time education. There are a further 122,000 who are economically inactive and not in full-time education, which adds up to a total of 217,000 16 and 17-year-olds alone. That compares with a figure of 170,000—quite bad enough—when the Government came to office. I should like to hear from the Secretary of State why she thinks that figure had deteriorated so much during her years in office.
	The next line in the table provides figures for 18 to 24-year-olds. A total of 997,000 18 to 24-year-olds are neither working nor studying nor training. Again, that is a bad figure; the total was 912,000 when the Government came to office. After nine years of initiatives, the new deal and all the other investment, the number of young people who are neither working nor studying nor training has significantly deteriorated since the Government started. Instead of the complacency that we heard from the Secretary of State, I hoped that for once she would tell us why the figures are still deteriorating. None of us can take any comfort from the fact that the position is so bad. The Opposition are entitled to be sceptical about the Government's chances of tackling this very serious problem.
	On page 27 of Sir Andrew Foster's report there is a little box that tells the story that we hear from anybody working in the world of FE. The box is entitled, "List of organisations with a monitoring/inspection/improvement role in FE colleges". I will not detain the House by reading out the full list. Suffice it to say that 17 different bodies are listed in the report as having a role in the regulation of FE. My understanding of what today's White Paper proposes is that one of the bodies, the adult learning inspectorate, is merged with Ofsted, but one new body is created—the quality improvement inspectorate—leaving us still with a net total of 17 bodies improving, regulating and auditing FE. That is far too many bodies supervising FE. It is clear from Sir Andrew Foster's report that that is the problem that he wants tackled.
	In some ways, the best bit of the report is appendix 2, where the real message comes across. It is entitled "A view from abroad", which presents evidence from other countries. In the United States,
	"There is no formal inspection process, national funding regime or national qualifications system".
	There is
	"a strong emphasis on self-regulation and a lack of top down control".
	In Denmark it is the same story. In Australia
	"There is a much simpler accreditation and accountability system".
	In the Netherlands,
	"Although inspection is more frequent than in England",
	there is
	"greater autonomy at institute level".
	The report is clear. There should be more autonomy for FE colleges, and fewer bodies endlessly inspecting, auditing and checking them—but there is nothing in the White Paper that tackles that problem. Instead, we still have a multiplicity of agencies.
	The Secretary of State spoke today about some of the measures in the White Paper. One of the features of it is the focus on the under-25s. We would like to hear more about how that balances out—what it will mean, for example, for programmes and courses that are particularly valued by older people, and whether the shift in funding will mean more of the kind of problems that were brought to all our surgeries in the past couple of years involving older people who enjoyed courses at FE colleges that did not lead to an official vocational qualification, but had found that their costs rose or their courses closed because the Learning and Skills Council was no longer willing to fund them.
	Many people get real social value from a range of courses—be it learning the piano or the guitar, or basket weaving. We would like to hear from the Secretary of State whether buried in the White Paper is a further shift of funding away from such courses, so that when people come to our surgeries again next year to ask why, yet again, the cost of those courses has gone up, we can be clear about when the Government made the statement, and what its implications were.
	There is a big focus in the White Paper on national vocational qualifications. Is the Secretary of State, like me, concerned about many employers' lack of confidence in NVQs? The paradox is that the funding is being shifted to NVQ levels 1 and 2, when those qualifications command no premium whatsoever in the labour market. They are not worth any increase in pay. That tells us something about what employers think of those NVQs. Why are the Government trying to funnel Learning and Skills Council funding into courses that, sadly, are of the lowest value in the labour market, and away from courses that have other values?
	I hope that in the course of the Budget debate we will get more information about these important points, which will enable us to get behind the rhetoric of the Budget statement last week and the Secretary of State's speech today, so that people working in education can have a little more hard information on which they can plan. The right hon. Lady failed to provide that information in her speech. I hope that we will hear more in the winding-up speech.
	Let us be clear that as regards the world of education, we have a Chancellor who can only talk money, does not understand the importance of reform, and failed to commit himself to the Education and Inspections Bill in his Budget statement. We have a Prime Minister who talks reform but can deliver it only with Opposition help and support. It is only the Opposition who have a commitment to the proper funding of education, combined with real reform of education. That is why only we can deliver higher educational standards.

Mr. Deputy Speaker: Order. I remind the House that there is a 10-minute limit on Back-Bench speeches, which applies from now.

Gavin Strang: I am grateful for the opportunity to follow the principal Opposition spokesperson on education, the hon. Member for Havant (Mr. Willetts), and my right hon. Friend the Secretary of State for Education and Skills.
	Many hon. Members are aware that one of the greatest post-war achievements in education was the setting up of the Open university by the Labour Government of Harold Wilson. Not everyone will recall that under the Government of Margaret Thatcher, there was a period when the Open university was at real risk. However, it was not abolished and I trust that all the major parties are firmly committed to its continuing success. I want to discuss the economy and participate in the general Budget debate rather than focusing my remarks on education.
	I congratulate my right hon. Friend the Chancellor on his 10th Budget statement. Labour Members have a lot to be proud of—for the first time in our history, this country has had 10 years of uninterrupted economic growth. The UK is at the top of the Organisation for Economic Co-operation and Development for stability in respect of growth and of inflation.

Stewart Hosie: Will the right hon. Gentleman give way?

Gavin Strang: A 10-minute limit has been imposed and many hon. Members want to speak. I would like to give way, but I want to discuss the general economy.

Peter Luff: On a point of order, I am sure that you want to be helpful, as you always are, Mr. Deputy Speaker, to the Member who has the Floor. If the right hon. Gentleman were to give way, injury time would be added to his speech, so he can give way without incurring a time penalty.

Mr. Deputy Speaker: I do not want to take out too much time in answering a point of order, but I am sure that the right hon. Gentleman knows the well-established rule of the House that injury time is available for two interventions. However, it is still entirely up to him whether he gives way in a particular situation.

Gavin Strang: Injury time does not extend the length of the match. The debate will still finish at 10 pm, so an intervention means that fewer hon. Members can take part.
	The UK is at the top of the OECD for stability of growth and of inflation, and interest rates and unemployment remain at historic lows. Average wealth per head has risen from the lowest in the G7 to second place—the G7 consists of the UK, the US, France, Canada, Italy, Japan and Germany. Furthermore, households across the income scale continue to see their living standards rise. A strong and strengthening economy, alongside the sound management of our public finances, means that this Government have again been able to invest in Britain's future.
	The Budget has served another purpose by shedding a little light on the policies of the official Opposition. After all, although Conservative Members are eager to tell us that they have changed, they are rather shy about what they have changed into. We now know that the Conservative party would reduce spending by £17 billion in the year ahead. On top of that, my right hon. Friend theChancellor has calculated that a Conservative Government would require public spending to be £16 billion lower in 2007–08, which would eliminate all possibility of additional investment in infrastructure, science or education.
	A key benefit of the economic strength and stability maintained by this Government has been the steady rise in the number of people in work. The UK has the highest employment rate in the G7, and the number of people in employment is close to record levels—up by 178,000 since last year. More people are in work, and with the national minimum wage, child benefit, the child tax credit and the working tax credit, this Government have made work pay. People are no longer better off on the dole. Alongside the high level of employment, the number of unemployed and the rate of unemployment have stayed and remain low.
	There has been a slight rise in unemployment in recent months. There has also been a large migration of workers from central and eastern Europe into this country, and, generally speaking, those people are now productive members of our labour force. There has been speculation that the scale of that influx might have been a factor in the recent slight increase in unemployment. It is early days, but the Department for Work and Pensions has published two working papers since the enlargement of the European Union in May 2004. I am pleased that the indications to date are that this migration is not the cause of the small recent rise in unemployment and that the overall economic impact of the migration has been "modest but broadly positive".
	The current budget balance is clearly important. We can argue about the scale of borrowing that it is prudent for the Government to undertake in any financial year, and we can debate what is a sensible maximum for the national debt as a percentage of gross domestic product. My right hon. Friend the Chancellor has articulated what is described as the golden rule with respect to our budget balance. I shall leave it to the economists in this House to argue about the length of the economic cycle, but it is worth making the point that, even with the previous dating of the economic cycle, the average current budget balance was zero and the cumulative deficit over the period was £1.9 billion.
	Hon. Members will be aware that the current budget balance depends upon two variables that stretch into hundreds of billions of pounds. Indeed, both current public expenditure and current receipts are in the region of £500 billion. To complain about the re-dating of the economic cycle on the basis of £1.9 billion is to fail to understand the errors inherent in any economic projection—it is difficult to say exactly where we are to the closest £1 billion—which is especially true when the projection is the difference between income and expenditure.
	One of the key themes of this year's Budget has been Britain's competitiveness in the global economy, and, of course, our economy would not have grown and would not continue to grow if there were a lack of confidence in its management. I have said a few words about the current budget balance, but, of course, we must not lose sight of the balance of payments—I am referring to our trade balance, which one might call the external balance. I encourage my hon. Friend the Financial Secretary to address the importance of the trade balance in the modern world, because, as hon. Members know, there has been a continued and substantial deterioration in our balance of payments. In the past five years, the deficit has increased from more than £19 billion in 2000 to more than £47 billion in 2005, and the trend was rising before that. At some point, the Government and hon. Members must address that point.
	In one sense, I am sure that hon. Members agree that it would be a good thing if we were to increase our imports from the developing world. The commitment of my right hon. Friend the Chancellor to the developing world is well known, and I believe that hon. Members on both sides of the House have acknowledged it. Thanks to the Labour Government, we are recognised as one of the leading countries in the developed world in addressing the challenge of global poverty. I hope that I speak for hon. Members of all parties in saying that the UK should seek to avoid economic activities that run contrary to the legitimate interests of people in the developing world. The policies that govern our trade must be as constructive towards the developing world as possible.
	In the limited time remaining, I want to discuss climate change, which we must consider when we talk about economic growth in the UK, Europe and the whole world. We certainly want our economy to grow in a way that minimises carbon emissions and our demand on finite resources, but we have not reached the point at which we need to implement drastic policies to contract the economy for environmental reasons. However, we must use energy much more efficiently, because we are exceptionally wasteful. We have not addressed basic issues such as fitting insulation to council houses. Time is limited, so I cannot discuss the use of finite resources such as fossil fuels.
	We need to address those important issues in the coming weeks. Thanks to this Government, living standards continue to rise. Our aim should be to secure continued stability and sustainable economic growth.

Sarah Teather: The Budget contains many welcome proposals on education, and I shall go through some of them in more detail. However, it is frustrating that, when the Government have some good tales to tell on education, they insist on over-hyping and over-selling their announcements. That is entirely counter-productive, because it hands a stick to the Opposition with which to beat the Government about the head, which is pointless. Re-announcing previous spending and artificially inflating the figures just leads to cynicism. If they were frank about their announcement, we could discuss the points of fact, welcome some of the commitments and debate policy priorities, which is what we should be doing in this kind of debate. Instead of that, we must spend some time unpicking the spin.
	Let me begin with the Chancellor's announcement that he is handing an extra £34 billion to schools. Of course, that got fantastic headlines, but the figure is based on adding up all the capital spend over the next five years, with many of the announcements having been made prior to the Budget. The extra amount in each year is actually just £1.6 billion, representing the rise from the planned £6.4 billion for 2007–08 to just over £8 billion in 2010–11.
	Then there is the impressive-sounding pledge to increase spending on state school pupils to the level spent in private schools, which, as the hon. Member for Havant (Mr. Willetts) pointed out, the Prime Minister promised to do some time ago. But there is no timetable for closing that spending gap—it is a vague aspiration. If Liberal Democrat Members expressed such an aspiration, the Secretary of State would accuse us, with some enthusiasm, of making ludicrous and uncosted spending commitments, yet the Government seem perfectly happy to express such aspirations. The pledge is to raise state school spending, at some future date, to the level of today's private school spending. That is a big enough task in itself. According to the Institute for Fiscal Studies, it would, even after the announcements in this week's Budget, require an extra £17 billion on top of planned spending. That would take 16 years to achieve if spending grows in line with the growth in the economy. Even then, it will not close the gap with the private sector unless the private sector does not significantly increase its own spending over that period. I suppose that we must at least be grateful that these myths were exploded within 24 hours, in contrast to the myth about the spending on school science labs, which took rather longer to decode. as the hon. Member for Havant pointed out. Such claims are unhelpful and breed cynicism.

Michael Connarty: I would not like to accuse the hon. Lady of trying to debunk a promise on the basis that it is good for the Liberals but does not reflect the Government's position. The hon. Member for Havant (Mr. Willetts) quoted the Prime Minister as saying that we will narrow the gap. The Chancellor said in his Budget that we will do away with the gap and match spending on public sector students to the level in the private sector. I should have thought that that is a significant move forward. I certainly welcome it and I hope that the hon. Lady will do so without being churlish.

Sarah Teather: I think that the Chancellor actually said that he would match the level of funding to that of today rather than talking about the gap. As the Secretary of State said earlier, there is no timetable for narrowing that gap. It depends on the rate at which private sector spending increases.
	Despite the spin and nonsense, the Budget contains genuine bonuses and good proposals for education with which I wholeheartedly agree. I shall highlight a few of those, because it easy for us to spend a great deal of time castigating the Government about things that we disagree with.
	First, let me highlight a proposal that nobody else has mentioned and that is unlikely to gain any headlines, spun or not, but which is none the less welcome—that is, that we should move towards a simpler and less burdensome assessment of research in our universities. We will need to look at the detail of that. However, it seems eminently sensible to move towards a metric system in place of the existing research assessment exercise and to run the old system in conjunction with the new. That is likely to be welcomed by all, especially universities. We look forward to the Government clarifying those proposals.
	Secondly, the Budget includes a genuine acknowledgment of the depth and scale of the problem of the shortage of specialist science teachers. Although that is rather late, as it comes 18 months after Professor Smith's report, it is welcome, as are some of the proposals. Liberal Democrat Members have for some time pointed out that it will not be possible to fill all the gaps in the system merely by recruiting new specialists, and that we must also invest in retraining teachers currently teaching in areas outside their own specialism. We made an election pledge to do that in our 2005 manifesto. The Budget announces pilots to begin that process. We look forward to the results of those pilots. I urge the Secretary of State to extend the scheme to language and English teachers, where there is also a critical shortage. I am pleased that the Government have acknowledged the shortage of specialist science teachers, particularly in physics and chemistry. The Institute of Physics and others have called on the Government to break their target down for recruitment to identify those areas of specialism in particular, and it is welcome that they have done so.
	The detail of the commitment to recruit, retain and retrain new specialist teachers remains unclear, as the hon. Member for Havant observed. Will there really be 3,000 new teachers, as reported by the press, given that the detail is not in the Budget papers? If so, what steps are the Government taking to entice people into teaching and to prevent them from leaving? Last year, they missed their own target for recruiting specialist science and maths teachers—and, indeed, specialist language teachers, where they fell short by a greater amount. What new activity are they proposing to ensure that they reach this target? Surely they need to look at this as part of a general problem with recruiting and retaining highly qualified teachers. We have a critical shortage of head teachers and, despite six-figure salaries being offered, many posts lie empty for extended periods. The Government need to get to the bottom of why so many people do not want to do the job. I suspect that when they ask teachers and teaching unions why schools find it so difficult to recruit highly qualified teachers, they will find that, despite the spin in the White Paper about freeing up schools, it is teachers who are desperate to be freed from the endless edicts from Whitehall and want far more freedom to teach a curriculum that meets the needs of their students.
	The money allocated to personalised learning is welcome, but the details of how it will be allocated are not clear, and I would be grateful for the Minister's clarification. John Dunford from the Association of School and College Leaders has described the current system for targeting extra funds on disadvantaged students as spraying funds around like Dick Cheney on a quail shoot. He points out that money is failing to reach the most disadvantaged students, with some schools doing comparatively well despite the fact that they are in low-performing areas. It is not clear from the Budget documents or from previous announcements whether the Government intend to target money based on data surrounding schools or on deprivation figures for the local authority. We urge the Secretary of State to go further and consider targeting on the basis of individual pupils. We are examining the detail of how such a scheme could work in practice. It could absorb many of the existing funding streams for disadvantage and focus on underachievement as well as on disadvantaged students, no matter what school they study at, to give a greater incentive to take those students and to provide the support that they need.
	I am sure that the Secretary of State will agree that what would make the most difference in this respect is smaller class sizes, with very young children being the most important age group. That is why we would like class sizes for infants to be reduced to 20. We accept that it is an expensive commitment, so we would want to use the money allocated to the child trust fund to pay for it. We believe that it would be more effective to invest money in a child's education at five than to give them something that they can cash in when they are 18.
	I have mentioned some of the proposals that I welcome and others where I disagree with the Government's focus. Let me conclude by saying a few words about some glaring omissions as regards the proposals on further education. I had hoped that they would be clarified by today's White Paper, but that is not so. The greatest disappointment in the Budget, and indeed in the White Paper, is that while it repeats the earlier aspiration of closing the funding gap between schools and colleges for the same provision, there is no timetable and no concrete commitment to achieving it—it is another uncosted aspiration. The young people who study in FE colleges are disproportionately from less affluent backgrounds, and each is short-changed by about £400 a year.
	The White Paper contains some welcome warm wordsabout a new set of principles for funding 14-to-19 learning such as laying out comparable funding for courses irrespective of institution, recognising genuine costs and advocating an approach that should not limit students' choices. However, the task has been hived off to a technical funding group and I am worried about how much will get implemented and over what time scale. Students and colleges need these changes now.   Programmes such as the increased flexibility programme are not funded to the level of true costs, with many colleges, including the College of North West London in my constituency, reporting that they subsidise the programme heavily, with a dramatic impact on courses in other areas. The Government cannot push on with an agenda of contestability and rely on the good nature and social justice ethos of colleges without adequately funding them.
	If we are looking for a place from which to squeeze money, perhaps the Learning and Skills Council should be a prime target for cuts. I welcome statements in the Budget about slimming down that obese organisation, but its costs are astronomical. They run at more than 10 times the costs of the equivalent body in higher education. The LSC is a bureaucratic monster, unaccountable to local people, barely accountable toParliament and unpopular with colleges. The Government should take a firm hand with it. One of my favourite idiot edicts from that organisation said that science and maths courses should be a low priority in London and proposed that colleges should cut them. Thankfully, it appears to have seen sense, but that is indicative of an organisation that is grossly out of touch.
	The new first level 3 entitlement up to the age of 25, which is included in the Budget, is welcome and has been our party policy for some time. However, the allocated £25 million looks likely to cover only those already paying for the course. Given the statements of the Chancellor and the Secretary of State about the importance of that qualification to the economy, will the LSC be charged with recruiting more students to study at that level? If so, where will the money come from? Are colleges expected to take it from existing adult provision and cut that even further? We already have a crisis in adult provision, not only in basket-weaving or underwater swimming, but in core courses, which are vital to the economy.
	The Budget announces the roll-out of the train to gain programme, but the Government do not seem to have taken account of the IFS report, which said that the scheme had little if any impact in the pilot areas because those who trained under the pilot scheme—the national employer training programme—would have done so anyway. What changes have the Government made to the scheme to take account of the IFS evaluation? They cannot bleat about the importance of evidence-based policy if they choose to ignore evidence that is presented to them.
	The Budget contains some welcome proposals, marred by the usual dodgy statistics and over-inflated claims. However, it also contains some glaring omissions in policy areas that specifically target under-achievement in the most disadvantaged groups. If it had a school report, it would read, "Not bad, but could do a lot better."

Barry Sheerman: In the short time available, I begin by saying that, in 10 minutes, I shall probably appear to be rather negative about the Budget, but I shall try to be balanced. The hon. Member for Havant (Mr. Willetts) has already given a good advertisement for the independence of the Select Committee on Education and Skills by drawing attention to the two recent reports on public expenditure as it relates to education. Every year, our Committee examines spending to ascertain whether it is good value for the taxpayer and whether we can have confidence in the Government's assumptions. It is our job to be independent and objective and to tell the Government how we feel about the comparison between their statements and what they deliver.
	Our report, which was published only two weeks ago, stated:
	"The Government sets great store by stability of funding; it needs to ensure that budget holders across the education sector are aware that funding will not rise at a significant rate over the next spending review period and beyond."
	We pointed out that it appeared as though health spending had not only overtaken education spending as a percentage of gross domestic product but that that trend would continue. That was our view until only two weeks ago.
	Listening to the Budget debate and the remarks of the Chancellor of the Exchequer made me think that we had reached the right conclusions based on the evidence that the Secretary of State and the permanent secretary—who has now moved to the Home Office—presented to the Committee. The Chancellor made a range of commitments last week and it is our job as a Select Committee to track whether the Government follow them through. We will monitor that progress carefully.
	After consulting some of the usual suspects, who immediately analyse the Budget figures, one expert from the London School of Economics suggested that, if one took the Chancellor's commitment to make expenditure of £5,000 a year per state school pupil catch up with the independent sector's £8,000 a year per pupil and timed it for five years, it would cost between £17 billion and £20 billion. If that is the case, it would mean a genuine increase in education spending across the piece, perhaps overtaking health expenditure to account for approximately 7.2 or 7.3 per cent. of GDP.
	I warn the Government that we have a job as a Committee and when the Secretary of State appears regularly before us to discuss the Department's work, we will ask her how far she has got on spending between £17 billion and £20 billion and reaching the education funding target of 7.2 per cent. of GDP. The Chancellor must have known what he was doing last week and we therefore take comfort in the fact that we have a Government who have reasserted their commitment to prioritising education spending.
	Some discussion about the personalisation agenda has already taken place. I intervened on the Secretary of State because I wanted to ensure that we were clear about the figures for that, and that those that she used did not constitute the total amount that would be spent over the two years but built on what had already been promised as spend. I was reassured by her response and I am pleased with the amount. However, I ask her to check regularly to ascertain that the money flows to fulfil the personalised agenda. Our Committee is in the middle of considering special educational needs and some of the most deprived—in every sense of the word—members of our community. Those people need the greatest amount of personalisation and we must get that right.
	Our debates are sometimes taken out of context. We often evaluate a Bill in isolation. I heard some colleagues discussing the new education measure out of context, as if it had nothing to do with the Children Act 2004 or   "Every Child Matters", which works towards transforming our education system and the way in which we view children. As we move on with policy, I suspect that we will be conscious that the joined-up government that we now apply to under-18s must apply much further through the age range, especially for special needs.
	We shall call the Secretary of State to appear regularly before the Committee to discuss science in schools. It worries all of us that, in the past 10 years, there has been a 20 per cent. decrease in students who study physics, a 34 per cent. decrease in those who study chemistry and a 32.4 per cent. decrease in those studying engineering. That is a serious decline. I appreciate that the Government have invested money in some of those programmes, as my hon. Friend the Member for Norwich, North (Dr. Gibson) mentioned. However, the situation is grave and applies not only to the UK, but to most countries in the developed world. It is not a problem in China and India, and that is worrying.
	Perhaps the most worrying figure in the Budget was the 3,000 extra science teachers. I have combed through all the relevant documents and I cannot find the money for that. I am sure that the Secretary of State will assure me that the money is there. I want to celebrate 3,000 extra science teachers because I know how urgently we need them. Is the money for them part of the £18 million announced to support teaching and learning in school science? If so, that amount just sounds a bit small.
	As Chair of the Select Committee, I would be neglectful if I did not welcome what I see as the adoption of most of the recommendations of the Foster report in regard to personalisation, to science and to further education. In some areas, the Government have gone beyond the report's recommendations. Much of the further education sector, in wanting to rebuild, wants to have a stake in the 21st century so that the kids in the sector can feel good about their environment. However, many representatives of the FE sector have a problem with borrowing the money and ensuring that they can pay it back over 20 or 25 years. The truth of the matter is that they are a less certain bet for the financial institutions in the City than are the academies.
	I also welcome the change in the research assessment exercise, but I urge the Secretary of State to be careful to get it right, because this is very important to our higher education sector. Yes, there is great discontent with the research assessment exercise—my hon. Friend the Member for Norwich, North conducted a very good inquiry into that issue when he was chair of the Science and Technology Committee—but if we get it wrong it would upset the whole of our research effort in British higher education. We have so much to be proud of in terms of the investment that the Government have put into it over the past few years, so the message is that we are very encouraged and we could return to being the top spender on research. Let us just make sure that the Chancellor's currency is good tender at the local banks.

Bernard Jenkin: I want to focus not so much on education but on the Chancellor and his Budget as a whole. While not quite a personal manifesto for his leadership campaign, his Budget speech gave us a vision of what Britain would be like under his premiership. He told us what he thinks about the key challenges that Britain will face in the coming years, and we now know exactly what to expect from his Government, with an emphasis, above all, on extending the power of central Government that he will control. I came away from the House after his speech with a feeling of alarm about Britain's ability to deal with the key challenges of this new century and about our long-term prospects as a major economic power.
	The Chancellor's strategy for this country appears to have been devised as though Britain were still in the 1970s and still competing with a handful of high-cost west European powers. We need to be clear about this: Britain is entering a period of unparalleled global change and competition. The Government, and especially the Chancellor, like to refer to global opportunities. That is right: the rapid economic development of places such as China does offer unparalleled opportunities for Britain. But those opportunities will become threats if the Government continue to ignore the way in which the rest of the world is developing.
	The hon. Member for Huddersfield (Mr. Sheerman) has just celebrated the ever-rising level of public expenditure. I should like to explain how that might not be the answer. We have grown used to facing competition from low-cost countries in lower-skill industries, but we shall increasingly find ourselves challenged right across the board as emerging economies begin to produce highly skilled, highly educated, cheap-to-employ graduates. There will be an increasing number of attractive alternative destinations for major business investment, and a country with an uncompetitive economy, and with high taxes and regulation, will lose out. Soon, Britain's problems will shift from retaining low-tech manufacturing to retaining high-tech manufacturing and even financial services and research and development centres. Britain needs to focus above all on ensuring that our economy remains competitive by keeping costs down and on ensuring that our education system is producing intelligent, highly skilled young people who will be able to compete with the brightest and best that other countries are producing.
	Unfortunately, the Budget speech does nothing to address these issues, despite its rhetoric. Reference to 4 million overseas graduates being invited here to be educated does not address the fundamental problems that our economy faces. For a start, the Chancellor has made no commitment to reducing the British tax burden in either the short term or the long term. Instead, he proposes to increase tax again. Indeed, he boasts about the fact. As my right hon. Friend the Member for Witney (Mr. Cameron) pointed out on Budget day, we are therefore still on course for having the highest ever tax burden in Britain, overtaking the tax burden of low-growth Germany. Predictably, the Chancellor has also ignored the direct pleas of the main business organisations to reduce corporation tax. There is a clear trend elsewhere in the world to reduce corporation tax, but that requirement does not appear to trouble him at all.
	It is bizarre to believe that we can compete against the rising economic powers in Asia with our current taxation system when it is obvious that we cannot. It is all very well to take credit for the rise in gross domestic product per head, relative to other countries, but that is in the past. We must look to the future. Britain is beginning to fall down the league tables of international competitiveness from which the Prime Minister used to quote so regularly when he was Leader of the Opposition. According to the Economist Intelligence Unit, Britain has fallen from second to eighth in the global competitiveness rankings since the Chancellor took control of the economy in 1997.
	The Chancellor's strategy will fail. Every year, Britain will continue to become less competitive, and he will delay taking the decisions necessary to meet the challenges of this new century. Of course economic stability comes first, but we have to reduce the tax burden as a proportion of national income so that Britain can once again become the most attractive place for business investment.
	The Chancellor seems to think that, however much he raises taxes, it has no impact on incentives, on the health of the economy or on competitiveness. That is wrong, and we should not make the same mistake as the Government by assuming that we can reduce taxes only by the amount that we cut spending. That is the myth peddled by the Government; it is not true. In Ireland, for example, taxes have been reduced, yet tax revenues have increased. Let me quote the EU Commissioner for the Internal Market and Services, Charlie McCreevy, who used to be Ireland's Finance Minister:
	"Back in the late 1990s when, as Ireland's Minister of Finance, I started cutting taxes, many people feared that the loss of revenue to the Exchequer would be massive and that the policy would have to be abandoned. But the opposite happened. Far from the policy causing an erosion of the Exchequer's revenue stream, reduced tax rates generated higher economic activity, greater taxpayer compliance and a surge in the tax take for the Exchequer."
	That is the policy that my right hon. and hon. Friends on the Front Bench will be pursuing and why, under a Conservative Government, we will spend more on the public services than a Labour Government will ever be able to afford.
	We can begin to reduce our tax burden very quickly by significantly cutting down on waste rather than on front-line services. Everyone knows that the Government are mired in waste. No doubt the Chancellor will claim that the Gershon review will reduce waste and improve efficiency—it has certainly confirmed that the waste is there. But it is becoming more and more obvious that the review, with its limited ambitions, is a public relations stunt created so that the Government could pretend to be doing something about waste and declining public sector productivity, when in reality they are doing nothing at all.
	The amount of regulation on business needs to be drastically reduced, including the vast amount of regulation that pours out of the European Union, which the Government seem to do virtually nothing to halt. Indeed, the notorious Legislative and Regulatory Reform Bill would give the Government unprecedented powers to overturn or repeal any Act of Parliament that affects domestic legislation, but it would do nothing to address the problem of EU regulation, which the Chancellor himself says accounts for more than 50 per cent. of the regulatory burden on business.
	It is right to put improving education at the heart of any economic strategy, but simply throwing money at the problem, which might earn the Chancellor cheers on Budget day, will not sort it out. We need meaningful reform of the system so that pupils leave school with a proper grasp of maths, science and English, which they need for the modern world. Free A-levels up to the age of 25 is all very well, but a mere drop in the ocean when it comes to the UK's real competitiveness. Over time, it will become increasingly evident that the Government's strategy will not be sufficient to deal with the challenges of the 21st century.
	Are we facing an immediate economic disaster? I doubt that there will be a single devastating event that highlights the Government's mistakes, but we will see, and are seeing, a long, steady period of eroded competitiveness and relative decline. The Chancellor readily quotes our growth performance against slow-growth countries such as France and Germany. But what about Portugal, Ireland, New Zealand, Canada, Australia and the United States? All those countries have mature economies, like ours, which are performing much better than ours. We should be competing effectively against them, but we are not doing so. We will simply not be able to carry a tax and regulatory burden that makes it difficult to do business here, and a dysfunctional education system that cannot produce enough well-educated and capable school leavers.

John Bercow: If the Government believe, as they claim, that selection within schools through grouping and setting can be a spur to improved economic performance, why are Ministers not prepared to invest some political capital into the process by issuing proper guidance?

Bernard Jenkin: We know why. This Government are paralysed by their internal splits and needed the votes of Conservative MPs to secure a majority to get their Education and Inspections Bill through.
	We know the scale of competition that we will face in coming decades. The Chancellor pretends that he knows. People should be increasingly alarmed by the prospect, for years to come, of this Government implementing the sort of policies that are in the Budget, which fail to tackle the problems that need to be addressed.

Stephen Byers: I draw the House's attention to my declaration in the Register of Members' Interests.
	The Chancellor's statement last week demonstrated the extent to which economic stability has now been embedded in our country, in stark contrast to the situation that constituents such as mine witnessed in the 1980s and early 1990s. From that position of economic strength, we can plan ahead with confidence for the challenges that this country faces—and we face several new challenges. I want to deal with the pensions challenge, which will need to be considered in the near future. In my view, it is perhaps the biggest challenge that we face as a country. Two distinct but linked issues must be considered. First, how can we come up with a set of proposals that will offer security and dignity for today's pensioners; and, secondly, how can we construct a new regime that is fair, affordable and sustainable for the pensioners of the future?
	The Government already have a good record with regard to pensioners. When we came into office in 1997, we were acutely aware of the way in which pensioners had been let down by the Conservative Government. In 1997, one in four pensioners—2.8 million—were in poverty. It was therefore right that a top priority for an incoming Labour Government had to be how to get money quickly to those pensioners to lift them out of poverty. We used the minimum income guarantee and, more recently, the pension credit to target resources and ensure that those pensioners were taken out of poverty. We were successful. As a result of those policies, nearly 2 million pensioners have been lifted out of poverty.
	Of course, all pensioners benefit from and welcome some of the universal provision that we have exceptionally made available—free television licences for the over-75s and the winter fuel payment, well regarded by pensioners throughout the country—[Interruption.] I will come to the council tax rebate in a minute. The challenge now is to achieve a national consensus on the way forward for tomorrow's pensioners and, at the same time, to give today's pensioners the security that they deserve, which, in my view, this Government should continue to deliver. Affordability and sustainability must be at the heart of our consideration.
	We must also be aware, however, that because of the way in which pensions policy has developed, with which I agree, and because the benefits that we provide are means-tested, a large amount of money is unclaimed by pensioners—money to which they are entitled and which the Government have allocated for pensions. The Department for Work and Pensions produces a useful example of the levels of take-up across a range of income-related benefits. The latest figures relate to 2003–04. I want to take the lowest estimate of unclaimed benefits—some estimates would be even higher. A minimum of 210,000 pensioners do not claim housing benefit to which they are entitled, which amounts to some £310 million. A minimum of 1,600,000 pensioners who are entitled to council tax benefit do not claim it, which means that at least £870 million of council tax benefit is unclaimed by pensioners. On the lowest estimate, 1,200,000 pensioners do not claim pension credit and the minimum income guarantee, which amounts to £1.6 billion.
	That is money that the Government have put aside for pensioners. If we take those three benefits together, £2.8 billion is unclaimed by pensioners. In terms of affordability, that money could be made available to pensioners. The total cost of the £200 council tax rebate is £800 million, and we should use some of the unclaimed money to support a continuation of that rebate for pensioners.

Bernard Jenkin: I am listening carefully to the right hon. Gentleman's speech. I question whether the Chancellor does not budget for a shortfall in the number of claimants of means-tested benefits. However, has not the right hon. Gentleman made the strongest arguments possible against the continued extension of means- testing, for which his Government have been responsible, and in favour of the application of universal benefits for pensioners, which they very much prefer?

Stephen Byers: That relates to what will be my next point, on a fair deal for the pensioners of tomorrow.
	We must do all that we can to make sure that pensioners claim unclaimed benefits. We all know the nature of pensioners, however—they are reluctant to go through a means-tested process, so those sums are unavailable to them. If we can make them available for universal provision—of which the £200 rebate is a good example—we should do so. However, almost £2.8 billion is unclaimed, so we should also consider those pensioners aged over 75, many of them women, who do not get the basic state pension. We all know that the age group with which we are concerned will have been at home and will not have paid their national insurance contributions—the pensioners in poverty today. If we can extend universal provision to them, at a net cost of £1.4 billion, we will tackle what is left of pensioner poverty in our country. We can do both of those within the amount of money unclaimed at present.
	I accept that there is real concern about the nature of means-tested provisions. I approve of the approach that we have adopted since 1997, which ensures that money goes quickly into the pockets of pensioners in greatest need. However, it was never a long-term solution to the problem of establishing a fair pensions regime. Some of my friends here will be surprised to hear that I agree with Brendan Barber, general secretary of the Trades Union Congress, who said:
	"You cannot build a long-term pensions system on mass means-testing of pensioners".
	I do not think that, when we come to consider a new regime for pensions, we can continue as we have since 1997. There cannot be minor adjustments to the present regime, or incremental change. We need to think fundamentally about the sort of pensions system that we want for the future.
	I think that the tests set out by the Secretary of State for Work and Pensions are the right ones. Does the new system promote personal responsibility? Will it be fair? Is it affordable? Is it simple? Is it sustainable? I believe that, along with the recommendations of the Turner commission, those tests strike the right balance between the respective responsibilities of the Government, employers and employees. That is why I approve of the package produced by Adair Turner.
	I hope that when the Government produce their White Paper, they will be prepared to embrace the thrust of Turner's recommendations. In my view, the Turner report provides the blueprint—the package of measures that can deliver fairness and justice for pensioners long into the future, which is what we should be seeking.

Andrew Love: rose—

David Taylor: rose—

Stephen Byers: I will give way only once, to my hon. Friend the Member for Edmonton (Mr. Love).

Andrew Love: One of the issues sidestepped by the Turner commission was that of the subsidy given to pensions, which is concentrated massively at the top of the pension range. Has my right hon. Friend any view on how it could be redistributed to help those in need?

Stephen Byers: I take my hon. Friend's point, and I have some sympathy with it. I hope that the Government will not duck that issue, among others, when the White Paper is published. I hope that they will take it on and that when we talk about a fair and just system for the future that is affordable and sustainable, they will consider issues such as tax relief. That is one way in which we can secure a system that is grounded in fairness, which is what we must try to achieve.
	I raised this subject today because I believe that the Labour party, in particular, cannot compromise on its duty to pensioners. We owe them a responsibility—a responsibility grounded in the traditional values of the Labour party. The Labour party is about ensuring, and recognising, that we can achieve far more when we act together than we ever can as individuals. Pensions present a good example of the way in which the people of today who create the wealth should look after those who, in years gone by, have provided for our country in good as well as more difficult times. It is for the Labour party to repay its debts, and I believe that a pensions policy based on the thrust of the Turner proposals represents a very positive solution.
	Let me make a final comment on the Budget. I was delighted that the Chancellor reaffirmed the commitment to the eradication of child poverty by 2020, and the commitment to halve the number of young people in poverty by 2010–11. He proposed increases in child benefit and more help to get single parents into work, lifting another 300,000 children out of poverty. That will make an important contribution, but we need to do more. We can build on that proposal, but the important message of the proposal and, indeed, the Budget is that we cannot have a strong economy if we have a weak and divided society.
	This Budget and this Government are committed to social justice and wealth creation working alongside each other. Long may that continue.

Peter Luff: It is a pleasure to follow the right hon. Member for North Tyneside (Mr. Byers), just as I followed him around India a few weeks ago. I found rather more in his speech than I expected with which to agree, although I did not think much of his opening remarks. He knows as well as I do that the stability we now enjoy is a product of the hard-won supply-side reforms of the 1980s and the economic policies of the early 1990s, and that the pensions crisis of which he rightly spoke is entirely the making of the present Government.
	I want to discuss two themes that are central to the Budget, education and international competitiveness. They are linked by the key theme of the skills that we need to make the United Kingdom fit for purpose in the 21st century. I will not succeed in saying all that I hoped to say in 10 minutes, but I have been helped by two excellent speeches—by the hon. Member for Brent, East (Sarah Teather), who spoke of the skills issues that face our country, and my hon. Friend the Member for North Essex (Mr. Jenkin), who spoke of the challenges of globalisation and the response that we should make.
	I wish to make three key points, the first of which is local. Worcestershire schools suffer monstrous discrimination, and the Budget does nothing to change that. The second is national. As the hon. Member for Brent, East said, the Chancellor was right to emphasise the importance of skills and education, but I doubt that his approach is radical enough to rise to the challenge. The third is international, and relates to what was said by my hon. Friend the Member for North Essex. The country has not yet woken up to the challenge of globalisation and, I fear, is sleepwalking complacently towards mediocrity.
	My conclusion is that the Budget does some sensible things and many foolish ones, such as introducing retrospection in inheritance tax rules and causing massive inconvenience by bringing forward the date for completion of income tax self-assessment forms. It simply does not match the scale of what is happening in the wider world: as I have said, it is a Budget for mediocrity, not excellence. It is a Budget of councils, reviews, consultations and even national debates, but not of the action that we need in order to take on the world.
	Why is that? The Chancellor fails the test of the greatness to which he aspires because he is a compulsive meddler. He also thinks that he knows how to spend our money better than we do. His dogmatic insistence that the growing levels of public spending—or investment, as he mischievously describes it to make it sound even more virtuous—are compatible with our country's international competitiveness is simply wrong. We should be sharing the proceeds of growth between increased spending on public services and tax reductions, as my right hon. Friend the Leader of the Opposition rightly proposes.
	I am afraid that, for all his fine phrases, the Chancellor is not a big-picture man. He is a micro-manager, and micro-management often makes life very difficult for business. It sometimes brings disaster in its wake for enterprising companies. Let us look at what the Chancellor has done to Evesham Technology in my constituency. There is a long letter on his desk—I hoped to quote it at length, but I have not enough time—from the finance director. In his persuasive letter, he says that the home computing initiative
	"relies on this exemption"
	—from income tax—
	"launched a mere 27 months ago in a blaze of publicity by Patricia Hewitt."
	It has gone.
	"It took from January until June 2004 for the model"
	—for delivery of the system—
	"to take shape with the creation of HCI compliant documentation, marketing materials, web sites, order entry portals etc and the first real revenues . . . did not start flowing until July 2004.
	In May 2005, due to the changes in the Consumer Credit Act, the documentation had to be redrafted and further legal costs incurred."
	The scheme was successful, however, so Evesham Technology
	"invested over £100,000 in new printing equipment . . . £50,000 in display equipment"
	to demonstrate it, but both investments are worthless today.
	The tragedy is that the company was
	"in the final stages of implementing a new manufacturing line to assemble LCD monitors in the UK. That investment and the jobs it would have created is now extremely unlikely to happen."
	The Chancellor's micro-management is to blame—constant, endless tinkering with the tax system, instead of the stability that we crave.
	My other local point relates to education. I am a reasonable man and I freely admit that school spending has risen sharply under this Government. Capital investment is higher that it was in 1997—owing, of course, to the golden economic inheritance of this Government, which I hoped would have provided a Conservative Government with the same ability to increase expenditure on education. I welcome what has happened, but I do not welcome the way in which Worcestershire pupils are being left behind in spending per pupil. I complained about that under Conservative Governments in the past, but it has become worse under this Government. In 1997, the cash gap between funding per pupil in Worcestershire and the national average was £150; now, it is more than £400, and it is a whopping £840 in the case of neighbouring Birmingham.
	Given that the new Secretary of State for Education and Skills was educated in Worcestershire and that the Minister for Schools is a Worcestershire MP, I thought that things might get better, but I was wrong. Their plan for the next two years is for Worcestershire again to have below-average increases in funding per pupil, thereby making a difficult situation worse. What is more, if I have read the Red Book correctly, propositions for the distribution of funding as listed in paragraph 6.58 mean that local education authorities that already get high funding levels will get still higher ones.
	I have wondered why that should be so. Why should this discrimination against my county continue? I thought that perhaps those in London just did not understand the scale of urban and rural deprivation in my county. Perhaps they view it as some rural paradise where affluent upper-middle-class parents send their children to fine private schools and live in large mansions and farmhouses, far from the gritty reality of urban Britain. Perhaps they do not understand the level of poverty and deprivation in Redditch, Worcester, Wyre Forest and, yes, in my constituency of Mid-Worcestershire. How else can we explain the bewildering paradox whereby we are considered too rich to get a decent amount of cash for our kids, and too poor to qualify for the area cost adjustment?
	My suspicions were confirmed in a dramatic way by a presentation only two weeks ago by Dugald Sanderman, joint head of school and LEA funding for the F40 group of local authorities. He chose to illustrate their funding needs through a picture of a large house in leafy Evesham—ironically, it is, I think, lived in by a Labour supporter—set against a background of tower blocks. In another picture, taken from a marketing brochure for the market towns of Worcestershire, the lovely sights of my constituency, which I invite every Member to come and see, are set against a bleak urban landscape. It took me just a few seconds on the internet this morning to find a house in Birmingham that would have served just as well as a counterbalance to that urban shot. It has six bedrooms, four bathrooms, four reception rooms, a reception hall with library, a gallery landing with seating area and a heated swimming pool, and is selling for £1.4 million.
	That was the most dishonest presentation of the reasons for education funding distribution that I have ever seen. Dr. Goebbels would have been proud of it, and Dugald Sanderman should hang his head in shame for making such misleading presentations. It was of course Goebbels who said that if one tells a lie big enough and keeps repeating it, people will eventually come to believe it. I will not let this lie gain any ground. It must be squashed. We need a fairer deal and I hope that it will be forthcoming.
	The hon. Member for Brent, East spoke well on national skills and I share her concern. I shall restrict my remarks to one simple point. Lord Leitch said at the time of his interim report:
	"The scale of the challenge is daunting. Delivering current plans will be difficult. Even then, it will not be enough to supply the skills that employers, employees and our nation need in order to advance. The UK must become world class on skills—for all of our sakes."

Andrew Love: One great concern about skills training is where the funding will come from for a major expansion. If we look at who funds, and who benefits from, skills training, we see that employers are at the top of the agenda. Does the hon. Gentleman support the view that employers must make a greater contribution to skills training?

Peter Luff: I have come to the reluctant conclusion that co-funding of many aspects of our education system will become the norm, so the hon. Gentleman makes an important point. I do, however, favour a radical reform of the higher education and further education sectors—I hoped to have time to explain it tonight, but sadly, it is denied me—that would achieve both savings and better outcomes.
	On international competitiveness, as I hinted, the Trade and Industry Committee recently visited India and examined trade and investment relations between our two countries, which are simply not good enough. Despite our strong historical link with India, we are losing ground. We will produce a report on this issue in May. India is but one of two large economies and a whole host of smaller ones that are lifting themselves out of poverty and on to the world economic stage. Our children will grow up in a world with three economic superpowers: the USA, China and India. Europe, never mind the UK, will be in fourth place at best.
	Britain faces many urgent challenges if it is to address that threat, but if we are to maintain the prosperity that we are in danger of taking for granted, we need to do five things. We have talked about them endlessly, and the sheer repetition and tedium of doing so means that we might lose sight of their urgency. We have discussed the skills base, and our creaking infrastructure is taken for granted as being a problem; our regulatory burden, however, is not. The Chancellor keeps talking about his intentions—he did it again in this Budget. In its audit of the Chancellor's previous nine Budgets, the London chamber of commerce says that he pledged to cut red tape on 25 separate occasions, but that over the same period 27,569 new laws have been passed, averaging 9,216 pages of regulation a year.

Stephen Byers: I want, if I may, to take the hon. Gentleman back to the subject of India, about which I thought he was going to speak for slightly longer. Does he agree that there is great merit in UK universities establishing business schools that focus on India? We lack such schools, and the Indian high commissioner is a great advocate of such an approach. I should be interested to know whether the hon. Gentleman, as Chairman of the Trade and Industry Committee, feels that there is merit in that idea.

Peter Luff: I am most grateful to the right hon. Gentleman for that intervention and I am happy to agree with him yet again. We will be taking an additional evidence session from the higher education sector after Easter to explore precisely that point and others. We believe that that is one of the major missed tricks in our relationship with India in terms of offering India services, bringing Indian students to the UK and the whole gamut of such issues. The Government have been timid in their approach and a lot more could be done. For example, given that Indian students who come to Scotland can stay for two years and earn money to pay for their fees, why is it that they cannot stay in England at all? True, the right to stay is being extended to one year; however, why is there one immigration law for Scotland and another for England? Such issues need to be addressed to ensure that links between India and the UK are improved dramatically. I entirely agree with the right hon. Member for North Tyneside in that regard. I wanted to say a lot more about the HE sector, but time is against me.
	The other issues that we need to address in facing the challenges presented by India and China include productivity, research and development, innovation and taxation. My hon. Friend the Member for North Essex was right to talk about taxation. This Budget marks the doubling in size since 1997 of the published tax code—from some 4,500 pages to approximately 9,000. Of course, that is on top of the growing burden of business taxation. The thresholds for corporation tax are unchanged; they have not even been uprated for inflation. Fiscal drag, one of the Chancellor's favourite stealth taxes, will increase the overall cost of doing business in the UK—at precisely the time when our major competitors are cutting their tax burdens.
	So our skills are too low, our infrastructure is inadequate, our regulatory burden is too high, our productivity is inadequate and our taxes are excessive. One can see why the view that China and India compete with us only on price and that they are in some sense stealing our manufacturing jobs—or our call centre jobs—is a dangerous one for us to cling to. The challenge is far more profound than that. For example, twice as many engineering graduates leave Indian institutions of higher education every year as are employed in total in the Indian call centre sector. That is a real challenge that we have to face up to.
	I hoped to say more about what I see as a declining work ethic in this country, welfare dependency, a client state, a lack of international enterprise and a failure of imagination on the part of our HE sector in respect of India, China and other economies, but there is not time. I summarise my views by quoting Jonathan Guthrie, who wrote the following in the Financial Times on 23 March:
	"The Chancellor billed the Budget as a blow struck in the UK's battle to compete with such economic parvenus as China and India. But his rhetoric was undermined by a lack of measures to achieve this goal. Instead, Mr. Brown waffled on about loft insulation. The thought that British workers are increasingly snug during the winter cannot be causing too much panic among the tycoons of Shenzhen and Bangalore."

Ann McKechin: I am grateful for the opportunity to contribute to today's Budget debate. Clearly, today's theme has been education, but the Budget's overall theme has been how we cope with rapidly changing world circumstances.
	I welcome the particular emphasis this year on climate change and the strong indication that this policy area will be further developed over the coming weeks and months. A number of Members have already urged the Chancellor to go further, and I agree with many of their sentiments. However, as my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) pointed out last week in a thoughtful and well-argued contribution, it is also necessary to reach as far as possible a general consensus both inside and outside this place on how we are going to make the necessary changes.
	A recent poll about people's perceptions of climate change, carried out by the University of East Anglia, showed that a very large percentage of people—more than 90 per cent.—recognised that climate change was a major problem. But when asked who should deal with it, most pointed to multilateral institutions and to their own Government, rather than to action on the part of individuals. However, we know that we can make significant progress in reducing energy demand and, in turn, carbon emissions if we can greatly increase domestic energy efficiency and change entrenched daily habits such as the so-called school run.
	Our Government clearly have a role to play in moving energy efficiency forward, not only by setting better standards in building regulations, as was done in the Budget, and providing lower tax rates for more energy efficient technology, but also at times by encouraging a different mindset in our citizens. I am reminded of the long, often fractious debate about smoking in public places. I observed the implementation of the ban in Scotland just yesterday; there was surprisingly little fuss and already a growing perception that the vast majority of the population, including the majority of smokers, now see the ban as a necessary step to better health for the country as a whole.
	We need to expand the debate on climate change to all sections of our community, but we also need to accept that it will include making tough decisions, which is why I welcome the indexing proposals for the climate change levy. I hope that the Government will feel able to go much further both on vehicle taxation, especially as the relative cost of driving has gone down in recent years, and on aviation.
	In the longer term, we need to consider a much larger expansion of congestion charging and investing more in the Cinderella of public transport—no, not cycling but buses. I am delighted that the national bus scheme for the elderly and disabled will be extended to England. As Members are aware, Scotland will start its scheme next month, although I hope we can manage to make sure that if senior citizens want to travel between Gretna Green and Carlisle, that will be included in the scheme. We already enjoy a free scheme throughout the whole of Strathclyde, which has made a tremendous difference to the quality of life for many of our senior citizens. Some ingenious journeys have been undertaken. I heard last week that two ladies from Kilmacolm in West Renfrewshire regularly take a bus via Glasgow to Campbeltown to buy fresh fish—a journey of more than 200 miles.
	On a more serious note, greater use of buses by one section of our community will help to change the mindset about that mode of transport and will, I hope, also encourage younger generations to see its benefits for their daily journeys. I impress on the Government, however, that both in Whitehall and in the Scottish Executive we need to tackle the continuing problems caused by the deregulation of bus services, so that services are seen to be regular and reliable at all times of the day and night, to encourage greater use.
	I welcome the continued support for microgeneration. We need to show long-term support for that industry if its market share is to grow to the extent that it becomes part of our everyday choice in providing energy for our local communities. Unfortunately, as I found recently, it is still difficult to purchase the right type of energy-efficient light bulb. If anyone has managed to buy the equivalent of a 100 W bayonet bulb, they are doing well because those bulbs are certainly not to be found in most shops.
	We should be looking more widely at the construction of major developments. We need to reach a point where they create an energy demand on our national network as near zero as possible. There are some good examples that we can follow from this country and around the world, and we need to ensure that such provisions are fully integrated in our planning and building proposals. Today we heard the good news that wind turbines are being installed faster than predicted, which shows a real interest and keenness to pursue that market.
	My second point relates to globalisation, which has   already been broached by the hon. Members for Mid-Worcestershire (Peter Luff) and for North Essex (Mr.   Jenkin). Our economy is heavily dependent on world trade, particularly in our services sector, so any rise in protectionist sentiments is clearly of concern. Symptoms of the problem are already evident in the current World Trade Organisation negotiations, which at best will achieve a much narrower set of agreements than was originally hoped. The underlying problem is a growing disconnection on a global scale between growth and employment creation rates. The UK's main strength over the last eight years has been to focus our principal priority on creating more jobs, but that picture has not been replicated elsewhere.
	Various speakers have mentioned the growing markets in China and India, but although the Chinese economy continues to grow at 9 per cent. a year, the country has not reduced its national poverty levels since 2000. Despite the explosion of its export market throughout the world over the last five years, the number of its people employed in manufacturing has reduced, so I suggest to Opposition Members that the Chinese may have to focus quickly on an increase in taxation and the creation of a vibrant and strong public sector if they are to deal with the vast number of urban unemployed that will face them in the next few years.
	The consequences will undoubtedly affect us all, which is why it is crucial that at international level, whether through the EU, the International Monetary Fund or the World Bank, we consider how to align labour policies more closely with developments in trade, and ensure that we have the ability to react quickly to rapid change. That is why the specific measures announced on extending research and development support to medium-sized enterprises and the strong emphasis on supporting science at all levels is so crucial.
	A number of those measures are specific to England, but the move to enable pupils to study three sciences at GCSE is sensible. There is growing concern about the small number of undergraduate students choosing science, and we need to reverse that trend. Last Friday I had the pleasure of opening new X-ray labs in the chemistry department of Glasgow university, and when I discussed that issue with the staff they said that they had no problem in recruiting students. The key to that was the fact that their four-year course allows students to specialise after their first year at university. The world of university science is very different from that of the school, and choices can be made better when students are following their university course.
	Glasgow offers a good example of universities working together. Under the Westchem initiative, Glasgow and Strathclyde universities share their resources and offer a joint service to the private sector, ranging from BP to local small and medium-sized enterprises. As was pointed out earlier, there has been a considerable increase in investment, with new cutting-edge equipment that allows enterprises to compete at a global level. We need to make sure that such initiatives are expanded throughout the UK.
	As the hon. Member for Brent, East (Sarah Teather) said, the Government have made radical proposals for university research funding—the new health research fund and changes to the research councils—and I would be grateful if my hon. Friend the Financial Secretary stated how the Government intend to consult the devolved authorities when working through those plans, to co-ordinate policy throughout the whole UK.
	I commend steps to increase training for those with no or low skills. If we are to remain a competitive economy we need to ensure that everybody has the opportunity to move out of low-paid work. That relates particularly to women, who represent the vast majority of those in low-paid work. The equality agenda is also a prosperity agenda for this country, and I commend the Budget.

Richard Spring: It is a pleasure to follow the hon. Member for Glasgow, North (Ann McKechin), who made a number of telling points, picking up on the equally telling points made by my hon. Friends about globalisation and the dangers of protectionism, which is rising greatly in some parts of the European Union—greatly to the disadvantage of the competitive position of Europe overall.
	It was interesting that the latest edition of The Economist, which has generally been favourable to the Government, has the headline, "Gordon Brown's Do-Nothing Budget". An article in the magazine stated that
	"there are worrying signs of deterioration . . . an unsustainable boom in consumption and the housing market . . . the economy toils under the growing burden of taxes and regulation that he has imposed".
	I want particularly to deal with the latter point.
	I think we would all agree that there is a certain imbalance in the structure of the British economy. The importance of the financial services industry has become utterly pre-eminent, as the decline in manufacturing and manufacturing employment has taken place in this country. The Chancellor has appointed a panel to look at the financial services industry—some great and good individuals who will meet somewhat infrequently—but our real concern, which we must really examine, must be that the burden of regulation does not become too oppressive in this country. Unlike manufacturing, which is difficult to move, it is much easier for the financial services industry to move to Shanghai, for example, to locate the headquarters of a bank. It is not only the tax regime that we have to worry about, but the regulatory burden.
	In the past few years, a culture of regulatory self-protection has grown up in this country. Instead of appointing a panel, the Chancellor should have looked carefully at the functioning of regulation, especially across the economy and the vital financial services industry. There should be an additional, fundamental remit for the Financial Services Authority on competition and competitiveness. The FSA should have independent directors, principles-based direction and a moratorium on EU regulation, accompanied by mutual recognition of other regulatory systems.
	The British Chambers of Commerce has expressed disappointment that the Chancellor did not produce specific targets across Departments for the reduction of regulation on business. After all, 2006 is meant to be the year of delivery for deregulation. The BCC argues that the cost of regulation has grown by some £50 billion since 1998. The Government have not sought an official measurement of the administrative cost of regulation imposed on business, which disproportionately affects small businesses. The obsessive micro-management that has become a characteristic of this Government is a beanfeast for lawyers and accountants.
	It is worth remembering what the Labour manifesto said in 1997, which echoes the powerful point made by my hon. Friend the Member for Havant (Mr. Willetts) earlier:
	"The myth that the solution to every problem is increased spending has been comprehensively dispelled . . . More spending has brought neither greater fairness nor less poverty. Quite the reverse . . . The level of public spending is no longer the best measure of the effectiveness of Government action in the public interest . . . New Labour will be wise spenders not big spenders."
	The irony of that manifesto commitment when set against this and recent Budgets cannot be lost on anybody.
	The most extraordinary aspect of the Budget was that the Chancellor failed to mention the health service, which accounts for a huge part of the budget, even once. Indeed, the next day he was interviewed on the BBC, and when asked why he did not mention health, he said:
	"I do not re-announce things in the Budget".
	The Chancellor is not known for his sense of humour, but that is absolutely mesmerising. This Government are obsessed with re-announcing spending, and the Chancellor came into office double and treble-counting spending statistics. The truth is that health spending will rise by 2008 to some £94 billion out of £552 billion, yet there will be fewer beds in the NHS than there were in 1997, and despite that great spending, we have a massive spending crisis.
	I do not wish to personalise any remarks directed at the Secretary of State for Health, who has an unenviable job because the NHS is a huge monolith controlled by Whitehall. However, as she has rattled out the endless statistics about the health service in the past few months, I have been reminded of Madam Ceaucescu announcing massive increases in potato production in Romania. The Secretary of State was interviewed yesterday on television, and said that the devastating cuts in employment in the NHS, the reductions in wards and beds and the hospital closures were all to do with improving patient care. It was like the Tsarina in pre-revolutionary Russia believing that everything was marvellous because the Potemkin villages had been put up—unrelated to any reality.
	The truth is that the NHS has concentrations of real problems because of a funding formula that actively discriminates against parts of the country. In my constituency, for example, we have a per capita spend next year of £1,051. For the Prime Minister's constituency the figure is £1,442 and for that of the Secretary of State for Health it is £1,306. Even for that of the Secretary of State for Education and Skills it is £1,245. It is curious that all the spending has moved towards the urban parts of our country, especially the north. In the south we have devastation and cuts, with all the implications that flow from them.

Peter Luff: I am listening with rapt attention to my hon. Friend, but I would not like him to leave the House with the impression that only the south has a problem. The problem is rurality. I have done a lot of work on the health service funding formula, and it is clear that it discriminates against rural areas, wherever they are.

Richard Spring: I accept that point, although I also recognise that the problem appears greater in the southern half of the country, even in areas of high population. That is exacerbated by the fact that the tremendous changes in the bureaucratic structures of the health service have played a huge part. If the Chancellor is to give out huge sums of money, they should be followed by changes in the organisation and structures of the health service.

Kitty Ussher: The hon. Gentleman suggests that the problems are worse in the south. Will he admit that in the past southern health trusts have overspent and been bailed out by northern health trusts, but we never knew that until the reforms had effect?

Richard Spring: I invite the hon. Lady to visit my constituency and see the devastating effect of ward closures and the threats to community hospitals on the demoralised and upset staff, who are voting with their feet. The successive changes to the formula have moved funding away, linked with a lack of recognition of the age profile in certain areas. Of course the huge increases in spending need to be monitored, and that too is ultimately the responsibility of the Chancellor.
	One of our local papers recently had the headline, "Staff exodus in NHS feared". People are leaving the health service because they feel so anxious about their jobs. The chief executive of my local PCT wrote in a local paper the other day that the PCT was "fully aware" of staff being stressed. There is no point in rattling out vast sums of money without recognising the devastating impact of the effect of the spending formula. It is causing real distress, and I dare say the Chancellor recognises that, which is why he left out any comment on a situation that is making headlines all over the country. People are desperately concerned about it. It is the price we are paying for not reforming our public services. The tax burden has increased, but we are not getting value for money out of the huge increases in the spending of taxpayers' money that we have seen in the past few years.
	In conclusion, I shall return to how The Economist sees matters. It states:
	"Mr. Brown's reversion to tax-and-spend, together with the ever-rising burden of regulation, is starting to do increasing damage to work incentives and business interests. The price for past excess, both by consumers and by the chancellor, will be future slower growth. As the feel-good factor fades, the politics of plenty will give way to the politics of austerity."
	We know about the declining competitiveness and productivity and the effect of micro-management, and all its consequences for the wealth of our country. The Economist concludes:
	"The chancellor was fortunate to inherit a strong economy whose public finances were improving sharply. If Mr. Brown's inheritance as prime minister is a weakening economy and a chronic budget deficit, he will have only one person to blame: himself."

Ian Gibson: The Chancellor has obviously been spending his time at Cape Cod in Massachusetts to the benefit of this country by talking to people at the Massachusetts Institute of Technology about subjects such as innovation and the creation of new products and so on. He has brought that to this country in an interaction at Cambridge university with MIT, whereby young people can interplay between the two institutions on their courses, come up with new, bright ideas and show a way forward for international co-operation in research. Again, that is mirrored across the world, as we find that published papers on industrial and scientific matters include the names of people not just from one country, but sometimes from 12 countries.
	A huge amount of interaction is going on. Academics are pretty good at knowing who is doing similar work, interacting with one another, deciding who is best at it and so on. I serve on a Department of Trade and Industry taskforce committee, and the Government are now considering which countries to interact with in different areas of scientific endeavour on everything from cancer research and health services to innovation and the development of various products.
	The innovation agenda is not easy to carry out—it is a very complex process—and I want to concentrate partly on the education end of it. It is easy to have very bright young people making inventions, publishing information and getting it out into the world, but few countries have been able to turn what they find out into a product that is interesting and useful for society.
	In this country, we talked for a long time about spin-out companies and we looked at those companies around Cambridge, Oxford, Newcastle, Manchester and Dundee. The figures show that this country has had more spin-out companies than anywhere else in the world in the past few years. There is no doubt about that, but the problem is that not one of them has turned into what we think of as a success: a big pharmaceutical company. Those companies are successes—they produce new products, such as vaccines and so on.
	This may not be appetising to Opposition Members, but we should applaud the collaboration and interaction between this country and Cuba, which is developing various vaccines. There is now an attitude in this country, which has not been present for some time, that we should interact with those other economies to produce products not just for our own country, but for other countries as well. That is to be applauded, and the Government have been part of that approach.
	As my hon. Friend the Member for Glasgow, North (Ann McKechin) said, we are doing something similar in the field of climate change, where new technologies are being developed—under pressure, of course, to bring down our CO 2 emissions, which is happening. Microgeneration and new homes with solar panels, as the Chancellor said, are very much part of understanding the science and technology engineering that is now available to improve the lot of not just our people, but people across the world.
	All that is part of a magic paper produced by the Chancellor of the Exchequer, "Science and innovation investment framework 2004–2014: next steps", but it is not a blueprint. We are not saying that we will carry out a, b, c and d, right through to z. There are experimental areas where we can improve, but there is a recognition that has never been known before in my experience of politics in this country.
	I spent my time as Chairman of the Select Committee on Science and Technology trying to find out who spoke on science and technology for the Opposition parties. I could never find anyone. They must recognise the problems associated with such issues, but the Government have recognised them for some time now and are putting more resources and effort into them.
	Innovation is a complex process to undertake. One of the factors is a well-trained, highly motivated and well-funded scientific and technological work force in universities and in our science and technology-based companies, not just those in the pharmaceutical industry. All the issues that are involved in innovation could be described in their own right—that would take a long time—but I want to concentrate on one of them.
	The hon. Member for Brent, East (Sarah Teather) talked about universities that have very many bright young people who think not just about innovation. I applaud that fact; curiosity-driven, blue-skies research is absolutely essential in creating an environment that takes people into a high-calibre university structure. This country's science and technology infrastructure is at a very high level, and it will improve over the years with Budgets such as this one and other resources.

Brooks Newmark: Will the hon. Gentleman give way?

Ian Gibson: I will not give way; I am bashing on.
	When we talk about young people, the real problem comes from the research assessment exercise. Not only has that exercise made teaching less productive and something not to put as much effort into as publishing research papers and getting high grades and therefore the money, it has also effected the young people who are part of that process and employed on temporary contracts. I understand absolutely why young people do not want to go into science after university. They want to go into the City and elsewhere because there is no permanent career structure for them. I know that there is no permanent career structure for anyone—particularly, MPs, of course—but people are owed five to 10 years in a job to exploit and understand the areas in which they are interested.
	Of course, the problem starts in our school system, where people are turned off science and do not want to study at our universities. I have talked about higher education, but this is also relevant in primary schools. Young people are interested in science; they are fascinated by it. They watch David Attenborough's programmes about the world. They want to go on field studies and see what the world is like. They want to talk about intelligent design—whatever that might mean—and compare it with Darwinism and so on. They want to talk about stem cells. There are many areas of fascination.

Sally Keeble: I am glad that my hon. Friend mentions those programmes, but does he agree that that the problem is that the BBC shows them so late at night, at a time when most children cannot stay up to watch them?

Ian Gibson: I thank my hon. Friend for that question. I would make watching those programmes compulsory in schools. The problem in schools is not a lack of interest among young people about science, climate change and so on. For example, there are a huge number of university forensic science courses. Forensic science is developing in our universities because of Amanda Burton on television. Everyone wants to be Amanda Burton, and there is no doubt about that when we see certain people in white coats who look much more glamorous than others.

David Taylor: My hon. Friend is making a powerful case about the potential of universities to do even more, but is he concerned, as I am, that it is more difficult for them to attract and retain high-quality lecturers? Attention needs to be given to university pay scales, certainly those of principal lecturers, because they have weakened considerably since I taught in higher education. We need to do something on that score, do we not?

Ian Gibson: That is an absolute factor for many people, but many other people are in higher education not for the money, but for the fascination of finding out about the world, why things exist and where they came from. That excites young people, too, but they never get the chance to get their hands dirty doing practical work. Schools need high-flying lab facilities so that the teacher is not doing things for young people but young people are doing things for themselves. When young people find something out and want to find something else out and the teacher says, "You must carry on with what the curriculum tells you to do," that is nonsense. They should be allowed to develop and explore attitudes and phenomena for themselves. That is what is missing. The science and technology curriculum in British schools is rotten. That puts young people off, as well.
	In that climate, is it any wonder, that teachers will be hard to get. Some of the students I taught used to say, "Oh well, I can't get on to a PhD, I can't do medicine, I'd better go and teach." We have got to change that attitude. One of the greatest things is for a person to be able to teach a class and inspire them. That is hard work and it may not be paid well, but, by gosh, when one meets students whom one has taught or young people whom one has gone into a school and helped—many people do that now—and one sees what they turn out like, it is wonderful. I even produced a Nobel prize winner. I do not know how. I must have said something interesting at one time, among all the mess and so on.
	There is a real opportunity to be creative. I went to a dinner the other night with creative arts people. They were all making graphic designs all over the place—they were wonderful young people. I was furious because I want to go to a dinner where there are young scientists who are inventing things and getting rewarded for that with a free dinner and the odd glass of something.
	We need to consider the regional development agencies. I am in a fantastic fight with one at the minute. Why is Norwich not a science city when there are six other such cities in the country where the scientific excellence is no better or worse than in Norwich? I will tell Members why: the person who runs the regional development agency in East Anglia was good at making crisps and is good at selling holiday homes, but knows absolutely nothing about science and how it can change the world for many people.

John Hayes: In the few minutes that the hon. Gentleman has left, will he tell us why he thinks a smaller and smaller proportion of students are studying science and maths at A-level? That is causing a problem with the feed through to university courses and therefore a shortage of people to inspire a new generation. Will he also comment on the ratio of investment in science in universities? Often the investment levels do not allow universities to do the excellent work that he recommends.

Ian Gibson: I thank the hon. Gentleman for those questions. That is absolutely true and that is why we have to put more investment in. More and more investment is going into schools for science. There are more labs being built. I think that £60 million has been spent during the past few years. The labs in private schools are excellent. There is plenty of money there. That is what we need. It is the same in universities, too: we need to put more money in and get more technicians and technologists, and not just high flying Nobel prize winners and so on. We have to change the whole ethos in our universities.
	I finish on this note. Somebody said that nothing was being done on health. That is absolute nonsense. I have a copy of a document that is quite clear about health. It talks about creating a "world-class" environment for health research and development. It says that there will be a joint document and joined-up thinking in relation to the money for health and the Department of Trade and Industry. We are going to tackle health issues, including strokes and Alzheimer's. We are going to do the research and are going to be part of that world movement. There is a lot going on and the Government are part of that and are going to employ an independent person—a tsar—to make things happen. At last, we are going to have a joined-up health research and development budget.

Stewart Hosie: I do not want to pour cold water on that wonderful speech, but I might bring Members back down to earth ever so slightly. The Budget was based on a 2 per cent. inflation figure. I know that the retail prices index basket has to include a large number of items to come to an average inflation figure, but my constituents on low and modest wages are paying council taxes at twice that rate. The petrol that they are filling their cars up with to go to work has increased at four times that rate. They are paying gas and electricity bills that are rising at 10 times the official inflation rate. The figure of 2 per cent. bears little semblance to reality for them. For some of the heavy energy users—the businesses in my constituency, which have seen prices rise by 100 per cent. in the past year or so—a 2 per cent. inflation figure is something of a fantasy compared with the 25, 26 or 27 per cent. surcharges that they are having to put on the cost of goods as they leave the factory gate.
	The Budget was very thin. The Royal Bank of Scotland described it as "Heavy on Light Measures". It also analysed it as a modest "give-away" of some £380 million in the forthcoming year, with a net tightening of £740 million over the course of the next three years. That means that the Chancellor took 61 minutes to announce an adjustment of perhaps 0.07 per cent. of total receipts. However, even that RBS analysis masks the multitude of minor micro-management adjustments that were announced and further disguises the many omissions from the Budget.
	One key omission was the lack of any significant measure to encourage more investment at home. The differential between investment from the UK overseas and investment from overseas coming to the UK was some £21 billion last year. It seems extraordinary that £3.47 billion of UK money was invested in UK offshore islands and some £6.27 billion was invested in Bermuda. Perhaps the Chancellor's biggest omission was his failure to consider a way of closing that gap to stop that £10 billion or £11 billion being parked—sorry, invested—in Sark and Bermuda.
	We also note that the pre-Budget report increased the tax in the North sea by some 25 per cent. Last week's Budget was an opportunity to redress some of that and to encourage the exploitation of heavy oil, which sells at some $10 a barrel less than other oils, in the central North sea. It could also have encouraged the development of new resources west of Shetland and exploration in the very deep waters west of Scotland. However, the Chancellor chose not to do that. Instead, through changes to taxation on blended oils, he actually grabbed £200 million. If that £200 million had been invested rather than grabbed, the Government could have removed the supplementary charge from tariff contracts to encourage the development of the small fields that are required to use existing technology, levelled the playing field for new entrants by increasing the extent to which unrelieved allowances are reimbursed, extended research and development tax credits to North sea activities, encouraged investment in heavy oil extraction and introduced a floor of $30 a barrel below which the supplementary charge would not apply. However, the Chancellor took the £200 million instead, and thus set back exploration and development and, potentially, threatened jobs.

Michael Connarty: As the secretary of the all-party offshore oil and gas industry group, I have to challenge the hon. Gentleman's assertions. The United Kingdom Offshore Operators Association made none of those points in recent meetings, but pointed out that this was a bumper year for profits for all people in the North sea. Of course it would like to have the money, but it is strange that the hon. Gentleman is pleading for the private companies. People would say that, when those companies make such a profit, they deserve to spend a little £200 million for public services.

Stewart Hosie: I am not a defender of big oil. I am here to defend jobs and future exploration. During my recent meeting with UKOOA, it made much the same point, but went on to say that some delay in exploration and development will occur as a result of the taxation that is being levied. I am happy to compare my meeting with UKOOA with the hon. Gentleman's at a later date.
	Having made my points about oil, I acknowledge that there were things to welcome in the Budget, not least the joint study with Norway on carbon capture. As I have said previously, that will commence with emissions from power stations to utilise some of the 750 gigatonnes of capacity in wells in the North sea. However, if the Government were serious about encouraging the use of more renewables in the fight against global warming and climate change, the Budget would have been the opportunity to address an imbalance in connection charges, which are the single biggest financial obstacle to efficient, large-scale, offshore wind production of electricity as part of the UK's energy supply. It is ludicrous that generators can be subsidised by £8.20 a kW in the south of England, yet perhaps charged £24.89 to connect to the grid in the north of Scotland. That problem must be addressed if we are seriously to examine the massive potential for offshore wind and help to tackle climate change and global warming.
	I said at the outset that the Budget was predicated on an inflation rate of 2 per cent, but it also seemed to be predicated on the massive expansion of public-private partnership schemes. Although those schemes might seem attractive to the Government right now in accounting terms, if they are anything like the scheme for the royal infirmary of Edinburgh, under which a building with a capital value of £184 million will end up costing the taxpayer £1.26 billion, I suspect that they will be far from cost-effective in the long run. Indeed, such schemes might burden future generations of taxpayers with a massive debt.
	A Budget that is predicated on the expansion of such PPP schemes, in addition to selling off some £30 billion of assets, five-year borrowings of £175 billion and a 5 per cent. cut in departmental spending, is fraught with danger. It is doubly fraught if it is based on a 2007 growth forecast of between 2.75 and 3.25 per cent because the low end of that range is higher than the industry consensus. If the Government's forecasts on growth and the tax take are wrong—we know that they were last year—the economy could well be on a knife edge. We would be mortgaged to the hilt and massively in debt, with the family silver sold off. With spending forecast to rise by £25 billion, £26 billion, or £27 billion every year until 2010–11, public sector debt forecast to rise year on year to £610 billion by 2010–11 and the treaty debt calculation due to rise year on year to £700 billion by 2010–11, there will be no room to manoeuvre if any of the calculations are wrong. No amount of changing economic cycles or fiddling golden rules will hide that.
	We welcome the announcement that the Office for National Statistics is to be made fully independent, but are slightly intrigued, given that the Chancellor, speaking to the Select Committee on the Treasury last March, denied that it was not fully independent in the first place. Indeed, he railed against the "unfortunate allegation" that the ONS was not independent.
	The ONS must be truly independent, not simply to ensure accurate, robust and reliable UK figures, but to ensure that it collects the correct data so that we can do a proper assessment of the Scottish, Welsh, Northern Irish and English regional economies as well. That is vital, especially for us in Scotland. We recently identified three things for which English-only spending was attributed to Scotland. The numbers were simply fiddled and the accounts looked wrong. Those three things were the moneys that went to inward investment for England, to the English Tourism Council and to the English Prison Service. It was right and proper that all that money was spent wholly in England, and right and proper that none of it was spent in Scotland. It was ludicrous, therefore, that some of it should have been calculated or assessed as unidentifiable and an allocation then awarded to Scotland for spending that did not take place.
	There is a further reason why the ONS must be independent. The Department for Work and Pensions was asked to justify allocating £60 million of European structural funds expenditure to Scotland. It told us:
	"The allocation within the limit Departmental Expenditure Limit . . . over country and region . . . is based on DWP staff numbers in those areas."
	Every penny could have been spent in Scotland, or none. The truth is we do not know because the money was allocated on the basis of how many DWP staff were employed in the nations and regions of the UK.
	We welcome moves to extend the research and development tax credits, but with UK R and D at 1.1 per cent. of GDP, it will do little to redress the balance against Japan, Germany and the US, with figures over 2.5 per cent., and nothing to redress the balance against Denmark, Sweden and Finland, which sit at 2.6, 3.9 and 3.5 per cent. of GDP respectively.
	We also note with dismay that council tax assistance for pensioners has been removed this year and are shocked, once again, that the link between pensions and earnings has not been restored. I noted that the right hon. Member for North Tyneside (Mr. Byers), in his leadership speech, mentioned moving towards a fairer citizens pension, and I agreed with much of what he said about that.
	I also noted in the Chancellor's Scottish press release mention of 400 civil service jobs being relocated to Scotland. I recently asked every Department how many jobs had been relocated to Scotland in the past five years. The answer was 94. I am not sure where the round number of 400 came from. Perhaps he used the same rigorous analysis as he did to calculate the Gershon savings.
	It is also disappointing that there was little mention of manufacturing. Some 100,000 Scottish manufacturing jobs have gone since Labour came to power. As the Government know, manufacturing production in Scotland has shrunk for three full quarters. There is a full-blown manufacturing recession. It is disappointing that they have not chosen to debate that and disappointing that a solution was not mentioned in the Budget or its documentation.
	Finally, in terms of Scotland, because mention of it was thin on the ground, there is £87 million in Barnett consequentials. That is £15 a head over two years. In a year when the Government are taking £2,000 a head out of the North sea, it seems a poor deal indeed.

Jim Cunningham: It has been interesting to listen to the tone of the debate, but at least we are talking about resources. If we go back pre-1997, as some Conservative Members did, I remember that we were talking about high interest rates and hospital closures. The Government have been attacked on their handling of the NHS, but do hon. Members remember people sleeping on trolleys because they could not get beds? That is the Tory record that the Conservatives want to inflict on us if they ever get into power again. The House will no doubt remember the 3 million to 4 million unemployed. Many of those were young people.
	The Government have pumped significant resources into education—a subject that we have discussed a great deal tonight—and the NHS. However, while I accept that they have pumped a lot of money into research and development and skills, they are still not doing enough, as has emerged in tonight's debate. The west midlands economy, for example, has a turnover of £77 million, which suggests what can be generated in a region that I have always considered to be the country's economic powerhouse. The midlands must keep an eye on investment, whether in research and development or in skills, on which tonight's debate has centred.
	It could be argued that the west midlands is starting to swing away from manufacturing into service industries, but the region's MPs must make sure that there is proper investment in skills and manufacturing so that we can bolster manufacturing. As the House probably knows, Peugeot has still not made a declaration about the Coventry plant. I do not want to be alarmist, but people in Coventry want to know what is going on. I accept, however, that Ministers have taken part in discussions with the company about future investment. We should not forget the problems with Rover in the past few years, including recent problems in Coventry when some Jaguar operations moved from the city to other parts of the west midlands. We have not lost jobs overall in the west midlands, but we did lose jobs from the home of the Jag. Only two or three days ago, however, Ford announced more investment in research and development operations at Whitley, where 2,000 to 3,000 jobs will be created. Overall, Coventry has received about £4 billion in investment in the past few years, which says a lot about the Government, who have been accused of burdening business with red tape by some people.
	I welcome the fact that free travel for pensioners is to be extended following a campaign that has lasted many years.

Brian H Donohoe: While the Government's proposal to extend free travel for pensioners is welcome, does my hon. Friend not think that we should work towards synchronising free travel for senior citizens across the country? He will know that in Scotland they already enjoy that benefit.

Jim Cunningham: Wherever possible we must work towards harmonisation in the UK, and free travel is one service where we can achieve that. Most people, including pensioners, like to travel, so why not offer free extended travel across the border? From certain parts of Northumberland it takes only an hour to travel to Edinburgh, which enhances the case for free travel.
	I accept that the Government have done a great deal over the years for pensioners. However, as my right hon. Friend the Member for North Tyneside (Mr. Byers) said, politicians from all parties must stop playing political football with pensions and achieve consensus so that we can solve the problem. I do not accept that it is all the Chancellor's fault, because there are a number of factors at play. Nevertheless, there is a pensions problem and people up and down the country are awaiting the outcome of the Federal-Mogul case. Some hon. Members will have constituency experience of that case, as many people have been waiting two or three years to find out the future of their pension. Federal-Mogul is locked in the American courts, so I welcome the fact that the Government established the Pension Protection Fund. However, we must consider whether we should increase that fund, as there will be many demands on it in future. I believe that we should certainly look at ways and means of doing so.
	I recognise the Government's tremendous investment in the health service, but we must be extremely careful about reorganisation. In the midlands, we believe that the important thing is not to lose touch with the sharp end. Whether it is the reorganisation of the police force or the health service in the west midlands, we must not lose touch with the sharp end; otherwise the public will become disillusioned with the service that we are trying to provide.
	The other issue that is causing concern in places such as Stafford is the amalgamation of the ambulance service. People think they have a very good ambulance service and are worried that if it is amalgamated with the west midlands service they may not enjoy a service of the same standard in the future. We west midlands politicians must continue to put pressure on the Secretary of State to make sure that that does not happen.
	We cannot duck the issue of budget deficits in the health service. Those are not necessarily caused by the Government. The introduction of any new system—in this case, a system of payment by results—inevitably causes turmoil. That is recognised by most people who know about change and management. A further problem that has emerged in the health service, although we do not yet know the scale of it, arises from the use of a different method of accounting. It appears that in some instances deficits have been hidden for a number of years and are only now coming to light. The management of the health service needs to be sorted out, and its financial structure must be better managed and accounted for. I hope that compulsory redundancies can be avoided and that we can get some form of agreement with the trade unions.
	We heard earlier about a possible series of strikes over local authority pensions. We must get talks going to resolve the matter. It is not in the interest of those who will receive the pensions, any more than it is in our interest, to see such disputes continue. People feel that their pensions are to be changed, despite promises made to them by employers. We should repeat to the public sector what we have said to the private sector: employers should try, as far as possible, to meet those aspirations and the commitments that they gave.
	Finally, the Budget was steady—some might say neutral. It contained some encouraging items, such as nursery provision and an increase in family tax credits. The Government have continued to focus on poverty. Britain might be wealthy but there are pockets of great social deprivation, and as politicians of whichever party, we should never lose track of that. I welcome all the measures in the Budget that deal with social deprivation.

Philip Dunne: I remind the House of the interests declared in the register against my name.
	The matter that I draw to the attention of the House is the credibility of the Chancellor in the context of his Budget speech. I shall highlight a few issues that were included in his speech and a few that were not. On the subject of today's debate, education, there is a credibility issue relating to the skills gap to which a number of hon. Members have referred.
	I am pleased that we have had an opportunity to focus on the skills gap, not least because in the survey of more than 1,000 businesses that I undertook in my constituency in the run-up to the Budget, the overwhelming cause of concern was the poor quality of school leavers presenting themselves for employment. This is not a criticism specifically of the schools in my constituency, which do a very good job. However, of the businesses that responded to my survey, 64 per cent. raised skills as the main problem for them, and of that group, 72 per cent. said the problem was getting worse, not better. This is a fundamental issue for the competitiveness of the United Kingdom, and it needs to be addressed.
	Instead of raising the skills of our work force, one of the ways in which the Government have been tackling the skills gap has been to import skills from elsewhere. For example, my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), whose constituency borders mine, regularly reminds the House that the shortage of dentists has been filled by dentists from his homeland, Poland. I have always taken his comments with a pinch of salt, but the point was graphically illustrated by the recent publication of an e-mail in which the British ambassador to Warsaw, Ambassador Crawford, stated that Her Majesty's Government have
	"created more jobs for Poles in the past year than the Polish Government".
	Much has been made of the announcement of extra money for schools and the aspiration to raise school spending per head close to the level achieved in the independent sector. I welcome more money for schools, although I have not been overwhelmed by the increase, which appears to be close to 1 per cent. of the total schools budget, but it is welcome none the less. To echo the comment made by my hon. Friend the Member for Mid-Worcestershire (Peter Luff), I urge the Government seriously to examine the allocation policy.
	In Shropshire, our children receive approximately £3,300 a pupil—that places the local education authority 10th from bottom of the 150 education authorities in this country—which is barely 75 per cent. of the average spending per pupil in this country as a whole. One area in my constituency is among the top 25 most deprived areas in this country. The issue does not solely relate to urban areas, because deprivation occurs in rural areas, too, and I urge the Government to examine the funding formula.
	On further education, the Secretary of State for Education and Skills has referred to a level playing field, which I would welcome, too, but I do not welcome the levelling of buildings. In my constituency, Bridgnorth college was closed last year and the site is being prepared for levelling. I urge the Financial Secretary to make a commitment in his winding-up speech that the proceeds raised by the sale of the sites of colleges of education that are being shut down in rural areas will be reinvested in the area where the facilities have been shut rather than being transferred to supposedly more deserving areas, which leaves even less provision for those in rural areas.
	The hon. Member for Dundee, East (Stewart Hosie) has welcomed the Chancellor's announcement of independence for the Office for National Statistics. Like all Conservative Members, I welcome that decision, because it was a Conservative policy, and it is reassuring to see the Chancellor in this, as in so many other areas, picking up our policy—the current consensus in politics is clearly working. That change was needed because of the credibility gap, which is of the Chancellor's own making.
	Since the Budget, many commentators have referred to problems with the presentation of statistics. On Sunday, The Business carried an article in which its correspondent, Allister Heath, discussed the way in which the Chancellor has chosen to portray productivity in this country as improving rather than the actual trend, which is declining. When the Chancellor was appointed too many years ago, he saw productivity as one of the main benchmarks for his success, and the article discusses that point:
	"His main trick was to break down the UK's productivity performance into three periods: 1972 to 1986; 1986 to the first half of 1997; and Labour's election to the third quarter of 2001, a period he claimed to be the first half of the current cycle. This allowed him to claim that the growth in output per worker had hit 2.13 per cent. a year in the final period against 1.93 per cent. and 1.5 per cent. in the previous two . . . The truth, as the official figures for output per worker reveal, is the exact of the opposite of the great performance that Brown chose to boast about. Productivity growth averaged 2.6 per cent. a year between 1992 and 1997",
	which was the last period of Conservative government, and fell to
	"2.1 per cent. a year between 1997 and 2001."
	It declined further to 1.3 per cent. between 2001 and 2005. In the past 12 months, it has declined even further to 0.4 per cent. So much for the Chancellor's productivity growth. I look forward to seeing how the ONS will portray that.
	I turn to something that I suspect arrived in the Budget as an afterthought—the assault on the trust industry. Several Members have referred to the impressive growth in, and our reliance on, financial services. The trust sector is a critical part of that. By seeking to impose such significant taxation changes on accumulation and maintenance trusts and other trust types, the Chancellor will drive a coach and horses through that industry and force it offshore. He may not have appreciated that many of these trusts have nothing to do with inheritance—they are to do with protecting assets, initially for minors and then for other young people while they are still in their formative years. Some were set up during the crusades to help estates not to fall into the wrong hands in the event of knights being toppled from their chargers overseas. This is a serious measure to propose with the flick of a pen.
	In the brief time that I have left, I should like to raise three issues that were not mentioned in the Budget. First, there is the credibility gap over pensions. The right hon. Member for North Tyneside (Mr. Byers) devoted much of his speech to that. I think that he was a bit economical as regards the way in which the Chancellor chose to present some of the pension-related measures in the Budget. A year ago, the Chancellor made great play of the fact that the council tax rebate for pensioners was being doubled from £100 to £200. That was not mentioned last week when it was abolished, with the result that pensioners' council tax will have soared by more than 20 per cent.
	The right hon. Member for North Tyneside also talked about Labour's responsibility for dealing with the pensions crisis that has been created. There is indeed a responsibility. I look forward to seeing what happens with Turner and deeply regret the fact that the Chancellor did not refer to that.
	I reiterate my concern that the Chancellor did not mention the NHS in his speech. I hope that he will be listening tomorrow when protestors from all over the country come to highlight the cuts that are being made in our community hospitals.

Kitty Ussher: I am grateful for the opportunity to speak in this debate. I will keep my remarks well within the 10-minute limit to allow other hon. Members to contribute.
	I want to focus not only on education but on manufacturing policy, and particularly the interrelationship between the two. My basic point is that I find nothing more heartbreaking than able, well-educated young—or not so young—people in my constituency being faced with the stark choice between leaving their community to get a decent job or forfeiting that opportunity to be nearer to their families. People should not have to choose between their community and their career. Social justice does not depend on the town one calls home—good jobs must be available wherever people live.
	As we have more than doubled the national average of people employed in manufacturing in Burnley, I am firmly convinced that British manufacturing can succeed in the 21st century. As an Amicus MP, I am proud to be part of the trade union that campaigned sincerely and hard for that success. I simply do not agree with people who say that manufacturing is something of the past—a 20th century preoccupation that is destined to be replaced. Although the sector may have declined as a proportion of our economy, it is still strong and important, and with the right policies it can have a bright future.
	The best of British manufacturing is definitely still the best in the world. I am proud to say that we have some of that excellence in my constituency, with companies such as Baxi Potterton, Aircelle, Tenneco Walker, TRW and Smiths Aerospace, to name but a few. The challenge we face, in Burnley or in Britain as a whole, is to ensure that we innovate to stay ahead in a fast-moving, competitive world. We do not want to—and we should not—compete on the basis of wages. Instead, we must compete by simply being the best. I want consumers around the world to choose British—preferably Burnley—products because they are the smartest, cleverest and most desirable bits of kit that money can buy.
	To achieve that, our firms need continually to innovate and train to stay ahead of the competition. Most of the responsibility for that lies with managers. After all, they need to do it to satisfy their shareholders, but the Government can help and the Budget does that. It helps by extending the research and development tax credit to companies of between 250 and 500 employees; reaffirming our commitment to science and extending the remit of the technology strategy board; streamlining our support for small businesses and increasing the focus on the effect of Government procurement on the economy; supporting the manufacturing advisory service, which, in the north-west alone, has helped companies achieve £120 million in productivity improvements; and, of course, continuing to resource the regional development agencies.
	In my constituency, the RDA is leading an exciting project, which is in its early stages. It is working with the University of Central Lancashire and the learning and skills council to bring a university campus to Burnley—with, I hope, a professorship in advanced manufacturing—alongside an enterprise centre and a revamped Burnley further education college. In the world of advanced, 21st century manufacturing, the availability of appropriate skills will ultimately determine where a firm locates. That is why the Chancellor is right to make this a Budget for education. School results are already improving under the Government and we must continue the reforms so that everyone, regardless of where they live or the school they attend, has the best possible education. I welcome the Budget's provisions to give more cash to schools.
	The main point about education that I want to highlight relates to the new deal. Although the Conservative party mocked and scorned it, hundreds of thousands of people are now in work, contributing to society and supporting their families because of the new deal. In my part of the world people are in work, but I often hear the complaint that the jobs are simply not good enough. People welcome the minimum wage, but they do not want to work in minimum wage jobs. The most important determinant of one's salary is the amount of training under one's belt. I have therefore long believed that the Government should not step away when someone enters employment. It is in the interests of Britain and the individual that the support should continue. We have conceded the principle for tax credits and we now need to do it for careers advice.
	Once someone is in work, the priority must be to get the necessary training to climb rapidly up the ladder, bring more income home and get the skills that employers need for their companies to compete more effectively. The best way to get a good job is to get a job. We have invested in lifelong and adult learning, but we can be smarter. After all, the Government know who the low earners in the economy are because they have everyone's tax records. Why not use that information, in the confines of the law on data protection, to provide individualised careers advice, training and support for the lowest earners in society—a new deal for those already in work? I warmly welcome the Chancellor's announcement in the Budget of the prospect of expanding the new deal for those in work who want to improve their skills. I look forward to the results of the review by Lord Leitch on what can be done.
	Social justice should not depend on the town we call home. We need to spread power, wealth and opportunity throughout poorer as well as richer areas. By taking action to strengthen manufacturing and give personalised help for people to access the training that they need to get the good jobs that they want, we shall move a little further towards achieving that objective, at least for my constituents.

James Brokenshire: It is a pleasure to participate in this important debate. I am also pleased to follow the hon. Member for Burnley (Kitty Ussher). I was especially interested in her comments about the role of manufacturing in British industry. Like her, I believe that there is a future for British manufacturing, but the key is continued investment in research and development so that we can innovate in the way she suggested. That flows into the general comments that I wish to make about productivity. However, unlike the hon. Lady, I draw different conclusions about the Budget's impact on that.
	My hon. Friend the Member for Ludlow (Mr. Dunne) cited many statistics, to which I would add one more. Output per worker failed to increase at all in the year to the third quarter of 2005, adding to the slip in productivity that we have seen over the past few years. The emphasis on productivity is essential for the future of jobs and wealth creation in this country, in terms of ensuring that we have a growing economy to which we can positively look forward. A number of elements will influence our productivity. One is research and development, to which I will return in a moment. Another is the focus on skills. We must ensure that we have a work force that is fit for purpose for delivering the productivity growth that will be essential if we are to compete in the global economy.
	The Government have announced their White Paper on further education today. They have obviously recognised the problem, in that they state:
	"The number of adults in the workforce without the skills at Level 2 for productive, sustainable employment in a modern economy is much too high: in that area we rank 17th out of 30 countries."
	However, the situation is even more challenging than that might suggest. We need to look forward to what will happen in the future, and Lord Leitch's interim report on the country's long-term skills needs to 2020 is extremely informative in that regard. He highlights the fact that improving the skills only of young people will not be enough, given that 70 per cent. of the working-age population in 2020 will have already completed their compulsory school education, and that half the 2020 work force is already over 25 years old. Lord Leitch states:
	"These demographic changes make it essential to improve the skills of older groups in the workforce."
	I entirely agree with that. It is a pity that the Government have missed the opportunity in either the Budget or today's White Paper fully to address the need to invest in skills for older people.
	Sir Andrew Foster's report on further education colleges highlights the fact that 14 per cent. of adults of working age have no qualifications, and that more than 5 million adults have literacy and numeracy skills below level 1. Lord Leitch predicts that, by 2020, without significant additional steps being taken over and above what the Government are proposing,
	"at least 4 million adults will still not have literacy skills expected of an 11 year old, at least 12 million will be without numeracy skills at this level (equivalent to three in ten adults) and 6.5 million will not have qualifications at the equivalent level to five good GCSEs."
	He goes on:
	"In comparative terms, the UK will continue to be an average performer—positioned, at best, in the middle of the OECD ranking".
	Globalisation continues to place an emphasis on the need to be able to compete in the global marketplace. That will involve greater flexibility in the skills of employees. During the course of an employee's lifetime in the workplace, there will be a continuing need for them to change and to be flexible. That is going to be more difficult for those who do not have basic numeracy or literacy skills. According to the CBI, eight out of 10 jobs require basic competence in literacy and numeracy. Then there is the personal impact of the lack of those skills on individuals. Many employees without basic skills in reading, writing or adding up live in daily fear of being found out. They do not take promotion for fear that they will be unable to meet the challenges involved. They are afraid of being found out and perhaps losing their jobs.
	Those are the direct personal costs involved. It is interesting to hear that some companies are seeking to address the problem by offering what one might call shadow information and communications technology courses. There might be computers in the training room, but the emphasis for the employee is very much on basic skills in reading and writing, rather than on computer skills. I suppose that that highlights the ingrained challenges.
	While there is a recognition of the problems, the Government seem unable to deal with them. At the end of last year, a report by the adult learning inspectorate described the Government's skills for life programme as a "depressing failure", adding:
	"The programme is not yet meeting the needs of the most acutely disadvantaged adults it was designed to help."
	I welcome the Budget's proposals for funding for free tuition for 19 to 25-year-olds embarking on their first level 3 qualification and the roll-out of the adult learning grant, but they simply do not go far enough. As I have highlighted, half of our 2020 work force is already aged 25 and over, and therefore will not be directly affected. The proposals do not deal with the basic skills that I have highlighted because they are pitched much higher. The initiatives do not address the fundamental issues of upskilling and ensuring that we meet the productivity challenge.
	Greater emphasis on work-based learning is needed, and employers and firms have a crucial role in making sure that their human resource and employment capital— their employees—are utilised and incentivised to the full. In many ways, the problem is that the Government have not provided enough encouragement and incentivisation for business to do that. Against the backdrop of heavy regulation and a heavy tax burden, firms are being actively discouraged from investing properly in their workers and ensuring training for their work force.
	Training is not the only area that lacks investment. To return to manufacturing, there is also a real gap in research and development, which is needed to underpin continued growth, employment and wealth. The much-vaunted Lisbon agenda to promote a strategy for jobs and growth in the EU set a target for R and D expenditure of 3 per cent. of GDP by 2010. The problem is that that target will simply not be met. Despite being an apparent advocate of the Lisbon agenda, the Government's national action plan highlights their failure by admitting only to an "ambition" that R and D expenditure will reach 2.5 per cent of GDP, and then only by 2014.
	When a lack of policy focus by the Government is combined with increased regulation and bureaucracy and an environment of increasing taxes, it is hardly surprising that industry is not investing sufficiently. The Budget announced some small-scale initiatives, but those hardly even scratch the surface. The long-term future of this country requires a rigid focus on innovation and human resources to drive the economy forward. The problem is that despite the initiatives, this Government's approach has been pedestrian. Time is not on our side, which makes it even more disturbing that despite all the indicators and warning signs, this Budget shows no signs of any change of gear from the Government. It is a failure of leadership, a failure of policy and a failure of delivery, which I fear will cost this country dear.

Sally Keeble: To give colleagues some time, I will be brief. Rather than dealing with the macro-economy, I will address three specific points relating to my constituency. I welcome the remarks of the hon. Member for Hornchurch (James Brokenshire)—although I did not agree with his approach, I also tend to focus on the skills gap and specific issues around education. I also want to deal with the Budget proposals on sport, about which no one has yet spoken, and which are important for my constituency.
	My constituency has a large skills gap at every level: at university level, in higher skills and in intermediate and basic skills. I am pleased that University College Northampton now has full university status, and I hope that that will both plug the skills gap at the higher level and serve to drive up standards across the whole school sector. I also welcome the Government's extra funding for our schools—a total investment of £115 million in a major schools reorganisation, with the aim of improving on a history of under-achievement in schools in Northampton.
	In that context, I welcome the announcements about extra spending in schools, which will build on the Government's good track record. I would, however, like more clarification. Our schools are all tied into a major private finance initiative scheme. I hope that there will be flexibility in the structuring of the extra finance so that we can improve some of the specifications of the PFI contract, or make it possible for head teachers to work collaboratively to commission some of the improved services that they want across the board.
	I also welcome the changes proposed for further education, especially the recognition of the important role played by the sector in driving up skills standards and dealing with some of the areas of disadvantage with which other education sectors have not been able to deal. I welcome "train to gain", because I think it important to ensure that when people are in work they do not simply stay at the level they have reached. It is well recognised that the Government have an obligation to improve their skills so that they can progress in their careers, and can retrain to meet changes in their sector of employment.
	I welcome the tighter focus on skills, but if FE colleges are to have more targeted ends, they will need more flexible means of getting there. I fear that some of the proposals in the White Paper will increase bureaucracy. That must be trimmed. If the FE sector is to achieve its target of improving skills in this important area, it must be freed to do so. In particular, it must be given the support it needs to tackle disadvantage and reach some of the marginalised groups. Northampton college has been especially successful in that regard.
	I particularly welcome the extra money for sport. Sport is often seen as an add-on, but, as we have seen, it is important in improving educational achievement for some of the most disadvantaged young people by giving them a different route into school, and giving them a sense of achievement and purpose. It can also be important in regenerating the economy in certain areas. We have observed the progress made by the street football schemes, and by some of the retraining schemes to help young people in the east end of London to become referees and coaches.
	In Northampton, in preparation for the Olympics, we set up a partnership—it is cross-party, and the hon. Member for Northampton, South (Mr. Binley) has been very supportive—between the public and private sectors. It includes the district and county councils, the chamber of commerce, the schools and the university, and it is being supported very generously by Barclaycard. Its aim is to develop sports and related services in our area to take advantage of the Olympics, while considering the potential for economic regeneration, educational issues, the culture, the legacy, the cultural festivals and the opportunities for universities. I was encouraged to hear the Chancellor's proposals for schools festivals and the expansion of sporting facilities.
	I hope that my hon. Friend the Financial Secretary will respond to those points and will listen to some of the representations from Northampton. I want to ensure that we can take some of the opportunities offered in the Budget. I want the sporting provisions to help boost our economy and give fresh chances to young people, many of whom missed out the first time, so that they can find a way back into education.
	I welcome this forward-looking Budget, which tackles some of the difficult areas in our economy, and I look forward to its implementation.

Michael Connarty: Despite criticism of this Budget from all sides, it confirms the stability of the British economy, which has taken us through some very stormy times. I point out to those who look back to previous Administrations that such stormy times would have brought their weakly based economies crashing down. I am thinking of the far east crash, the stagnation that the EU has faced for almost a decade—it could have moved forward if only it had taken the Lisbon agenda as seriously as we do—and the energy price hike that we are all suffering, but which we will see through.
	In this and previous Budgets there has been a constant focus on the supply side, which shows that the Government are on the right road. Many of today's contributors have shown that much of the scaremongering is not based on truth. The hon. Member for Hornchurch (James Brokenshire) must stop blaming the Government and take note of the fact that the UK private sector has not got the guts to make the investment that private sectors in other economies, which are going ahead of us, are making.
	My hon. Friend the Member for Glasgow, North (Ann McKechin) explained the world demographic situation, and in my view we have reached a tipping point. Within the next four to five years, through the growth of the city of Quonqing alone, more people will be living in an urban setting than a rural one. Many of them will not have jobs because the lack of concessions from rich countries in the EU and north America has stripped away their agricultural base.
	On science, last Friday I visited a company in my constituency that emerged from the fall-out from ICI. AstraZeneca Novartis has developed Amistar, which is the world's biggest selling fungicide. Amistar and subsidiary products are being developed in Grangemouth, in my constituency, and being sold to 100 countries, thereby earning $1 billion a year.
	Some have argued that health is not on the Budget agenda, but as has been pointed out, a lot of money is being invested in health. The figures show that when the Conservatives left office, such investment accounted for 5.4 per cent. of gross domestic product; it now accounts for 7 per cent. In real terms, investment has increased from £51.9 billion to £81billion—so health is getting the investment that it needs, and if there are problems with overspend, they must be examined at a local level.
	Education is the main issue on which I want to focus, and the problem with education expenditure is that it is not evidence based. The Education Committee said in its 2004–05 report that it had some concerns about the basis of the Government's investment in academies and special schools. I raise this issue today because I do not believe that the investment is being made in schools in England that is required to turn education round; rather, money is being invested in structural change, and massive sums are being invested in academies and specialist schools, which have yet to show that they can achieve what they are supposed to achieve.
	Earlier, a Conservative Member quoted the Prime Minister, who said that the worst thing that could happen to a child aged 11 was to be labelled a failure. However, we have failed to deal with that major problem. There are now more pupils in grammar schools in England than when we came to power in 1997, yet we continue to invest in structural change. Instead, this Government should be making proper quality assurance assessments. Such a body is to be set up, and someone described it as a quango, but quality assurance is about what happens in schools, the process that children experience as they go through school, and what happens when they leave.
	I am very pleased that the Government have at last decided to introduce synthetic phonics, which were piloted in the central region of Scotland when I was a teacher. They were then used in west Dumbarton, where the percentage of children who do not achieve the required level of literacy at age 11 has been reduced to 6 per cent. as a result. The target is a 100 per cent. literacy rate. I hope that England will experience a similar benefit through the use of synthetic phonics.
	Despite "Every Child Matters", the Disability Discrimination Act 1995 and the various measures being adopted in schools, the Government remain obsessed with structure. Some of the Select Committee's criticisms have never been answered. Sums of £50,000 from the private sector are matched by £100,000 from the Government, with £126 per pupil for the next four years. That is a massive investment, yet there is no evidence to show that pupils achieve in the speciality of the school. The general standard is raised, but when such massive investments are made in certain schools that is bound to happen. Academies are not achieving what was hoped for them, yet they can cost from £25 billion to £35 billion, completely distorting local authorities' investment priorities.
	I want the Treasury to look seriously at evidence-based assessments of what we are getting for our money, and to examine what happens in schools and the outcomes for every pupil, not just for the few who have the privilege of private education or massively distorted capital investment.

Mark Hoban: The project to remodel the Chancellor was making good progress until last Wednesday. The trademark red tie had been dropped for a lilac one, a kick-start in consumer spending through investment in casual wear, and a warmer, more cuddly Gordon on display in place of his traditional position—but then he spoke, and it became clear that nothing had changed in substance. No one is more impervious to change than the Chancellor. No Chancellor is more dogmatic or closed to fresh thinking. Yet again, we saw a Chancellor fixed on spending more, raising taxes and borrowing more. He has failed to learn the lesson that he cannot increase spending on public services without reforming them first.
	The hon. Member for Bury, North (Mr. Chaytor) made a telling intervention on the Secretary of State. He asked when the Government would achieve their target of closing the funding gap between private and state schools. The Secretary of State's answer was evasive, but the hon. Member for Huddersfield (Mr. Sheerman) was convinced that the Chancellor would not have made such a commitment without working things out first—without knowing what he was doing. It is a pity that the Chancellor did not tell the Secretary of State first.
	My hon. Friend the Member for North Essex (Mr. Jenkin) highlighted the global challenges from India and China. He talked about highly skilled work forces. Indeed, on the day that the further education White Paper was launched, it was entirely appropriate that time and again Members on both sides of the House referred to the importance of skills and training in the work force. My hon. Friend also referred to the importance of making sure that the tax regime is competitive and addresses the global challenges posed by economies in eastern Europe, China and the far east.
	The right hon. Member for North Tyneside (Mr. Byers) made a powerful speech about the risks of extending means-testing and the impact on the take-up of benefits. He made a persuasive case for adopting the Turner report as the basis of pension reform. The Chancellor said little about that in his Budget speech, but I hope that he heard, or will read, the remarks of the right hon. Member for North Tyneside. The Chancellor made no reference whatever to the council tax rebate that he announced last year and dropped this year, so I was pleased that the right hon. Member for North Tyneside advocated its extension in the future.
	My hon. Friend the Member for Mid-Worcestershire (Peter Luff), the Chairman of the Trade and Industry Committee, used his tremendous expertise and knowledge of India to highlight the threat that it poses to our economy. He suggested that we need to adjust our economy and skills base to reflect that challenge. He also spoke eloquently and robustly about the education funding issues faced by his local authority and the gap between Worcestershire and neighbouring authorities.
	The hon. Member for Glasgow, North (Ann McKechin) referred to the importance of climate change. She touched on free bus travel. As somebody who lives in a borough where the increase in grant from the Office of the Deputy Prime Minister was less than thecost of concessionary fares announced by the Chancellor last year, I take comments about free bus travel with a pinch of salt.
	My hon. Friend the Member for West Suffolk (Mr.   Spring) made a significant speech about the importance of maintaining the competitiveness of London as a global financial sector. He emphasised the need to take real action to reduce the burden of financial regulation. He also talked, with experience from his constituency, about issues with the health service. He highlighted, as several hon. Members have done during the debates on the Budget, the Chancellor's failure to mention the health service in his speech on Wednesday and his ignoring of the problems that we see in hospitals throughout the country.
	The hon. Member for Norwich, North (Dr. Gibson) spoke eloquently, as ever, about the science base and the importance of science to our country. I know that he speaks with both professional and political experience of that.
	The hon. Member for Coventry, South (Mr.   Cunningham) talked about the importance of reskilling older workers. It is important in the context of today's White Paper on further education to understand what impact the commitment to level 3 entitlement for those aged up to 25 has on the provision of training for older workers. Will they be left out? I know from talking to businesses in my constituency that are concerned about the challenge posed by economies in eastern Europe, India and China that they too are concerned about what happens to workers who lose their jobs and need to improve their skill base to compete in an increasingly global economy.
	My hon. Friend the Member for Ludlow (Mr. Dunne) talked about the skills gap, and highlighted issues that he had found among employers in his constituency, including the need to raise skill levels in local people. He referred especially to the importance of ensuring higher standards of numeracy and literacy in the work force. He made a powerful point about productivity, which has fallen by a fifth since the Chancellor came into office in 1997.
	The theme of productivity was also picked up by my hon. Friend the Member for Hornchurch (James Brokenshire), who identified the need to look beyond 25-year-olds. He said that a high proportion of 19 to 25-year-olds were either in education or already in the work force, and asked how they would fare under the White Paper published today.
	I wish to question the effectiveness of Government spending in raising standards in public services, and highlight the issue of competitiveness in the global economy. The Chancellor's unswerving belief is that the more one spends, the better the results. Indeed, even the Education and Skills Committee's first report of the 2004–05 Session admits that there is no evidence to demonstrate that the spending increases under this Government have led to a step change in standards at GCSE level. Why has the increase in spending on education not flowed through to the step change in performance that our constituents and taxpayers have come to expect?
	Too often, spending priorities have been set by Departments to meet targets imposed by the Treasury, with no regard for effectiveness. Let us take just one example. Through ring-fenced programmes, the Government have spent nearly £1 billion to tackle the scourge of truancy in our schools, but since 1997 truancy has increased by 30 per cent. The money has been spent not on tackling the underlying causes, but to meet targets imposed on the Department for Education and Skills by the Chancellor.
	Even in this Budget, when the Chancellor boasts about how much additional money is going directly to schools to spend at their discretion, he also boasts that he is giving them extra money to spend on personalised learning. That money will be spent at his direction, not at the discretion of head teachers. When will the Chancellor learn that the best person to decide how money is spent effectively in schools is not him, but the head teacher?
	Until the Government give head teachers greater freedom, we will not see improvements in exam results in line with the money spent on our education system. As this year's GCSE results show, the category of state schools with the most independence from the Government, city technology colleges, have the highest value-added scores and those with the least freedom from Government interference, community schools, have the worst value-added scores. Labour Members who block reforms aimed at improving the autonomy of our schools are blocking the step change in performance that our children need for their exam standards to increase.
	On public spending, we have a Chancellor who is stuck in the past and who has yet to learn from his mistakes. As the Committee established, extra spending in schools has not translated into a faster rate of improvement in results. There continues to be a culture of central Government knowing best, and dictating how much money should be spent and how, rather than leaving those decisions in the hands of professionals. The failure to reform public services has meant that additional expenditure has failed to achieve a step change in performance. The Government have shied away from the reform of the public services needed to ensure that taxpayers get improvements in line with the increased expenditure: another lesson that the Chancellor—the road block to reform—has failed to learn.
	To fund the increase in spending, we now have a tax burden at its highest since 1984. The Red Book forecasts an increase in the tax bill of another £5.5 billion. Some Labour Members will want taxes to be higher to pay for ever higher public spending, but that short-sighted view has already put at risk our global competitiveness. Having had the 10th lowest rate of corporation tax among our competitors in 1997, we now have the 10th highest rate. The burden of taxes in Britain is now greater than that in Germany. In an attempt to plug the shortfall in public finances, we now have one of the most complicated tax regimes in the world.
	Increasingly mobile flows of capital mean that businesses have much greater choice about where they locate. Increasingly, tax is becoming an important issue in determining where businesses locate. Increasingly, businesses are deciding not to locate in the UK. Is it a surprise, therefore, that Apple, Microsoft and Oracle have located their European headquarters in low-tax Ireland? One of the factors driving the growth of the Bermudan insurance industry is its favourable tax regime compared with that of the UK.

Jonathan R Shaw: What about inward investment?

Mark Hoban: The hon. Gentleman asks about inward investment, but he forgets that a lot of last year's inward investment flows fall from the merger of the British and Dutch branches of Shell. The business decided to locate in the Netherlands rather than the UK, because the tax regime in the Netherlands made it attractive to do so there.
	The City of London corporation's report on the global competitiveness of the financial services sector highlighted the increasing importance of the Government's decisions on personal and corporate taxes for Britain's competitive position. The head of tax at PricewaterhouseCoopers said:
	"A lot of UK tax is paid by a relatively few companies, and many of those have a choice about where they site some of their operations—the tax situation could persuade them to site discretionary additional businesses elsewhere."
	Labour Members may think that that is scaremongering, but Colt telecommunications made an announcement last month to explain why it would move its corporate headquarters overseas. It clearly identified:
	"an opportunity to materially reduce its costs by a change in domicile."
	The tax regime in the UK has made it unattractive for some businesses to remain in this country, with an impact on corporate taxes, national insurance, employment taxes, pay-as-you-earn, VAT and other duties.
	The Chancellor, true to his Labour heritage, is proving himself to be an old-fashioned Labour Chancellor—taxing and borrowing more to pay for more spending. As my hon. Friend the Member for North Essex said, he needs to learn that in an increasingly global economy, higher and more complex taxes drive businesses from the UK, thus harming our economy and threatening future funding of public services. There is nothing in the Budget to demonstrate that he understands the challenge that we face. Indeed, the tax burden is forecast to rise by £5.5 billion, not to fall. When the competitive threat is pointed out to the Chancellor, he is astonishingly complacent about it.
	In the booklet about the future of financial services in London published with the Budget, the Chancellor boasts about the cut in corporation tax, but he does not tell readers that other countries have been cutting their corporation tax rates as well. That is why we now have the 10th highest rate of corporation tax among our competitors, rather than the 10th lowest, which he inherited from the Conservative party in 1997. On taxes, the Chancellor has failed to learn from his mistakes. He is stuck in the past, failing to act on the realities of a global economy, by not creating a tax system fit for the 21st century.
	This is the Budget of a Chancellor who is so dogmatic in the pursuit of his own ambitions that he ignores the evidence. He is stuck in the past, failing to learn from his mistakes, failing to adjust to the global challenges from India, China and eastern Europe and failing to tackle the skills issues and deal with our increasingly complex tax base. High increases in spending have not led to the step change in public services that our economy and our country need, because reforms have been blocked. Money has been wasted, and to finance that spending he has taxed so much that our competitive position has been eroded. He has spent too much, taxed too much and borrowed too much. He is the road block to reform.

John Healey: This has been a shortened debate, but in a series of time-limited speeches—there have been 15 from Back Benchers on both sides of the House—there have nevertheless been some important contributions. The themes ranged widely, but at the heart of the Budget and this debate on it, is the economy. As the Chancellor reported in the Budget, the British economy is stable, strong and strengthening. In each of his 10 Budgets, he has been clear that his first priority for the UK economy has been, is, and will remain, stability. The decisive macro-economic reforms that he introduced in 1997 to monetary policy, to fiscal policy and to the planning and control of public expenditure were designed first to establish and then to lock in stability and steady growth.
	For 50 years, Britain's economy was prone to high and volatile levels of inflation. For 18 years under the Tories, until 1997, Britain was the least stable of the major developed economies—first in, last out, hardest hit by the recessions and world economic shocks. In contrast, in the Budget last week, the Chancellor reported that we have met our inflation target this year and in every year since 1997. In just a decade, long-term inflation expectations have virtually halved to 2 per cent. Today, long-term interest rates are the lowest that they have been for 40 years, at just 4 per cent. He reported that inflation is currently 2 per cent., which is on target. He reported that, in the latest quarter, the UK economy is growing at an annual rate of 2.5 per cent., which is on target. He reported on broad tax revenue projections since the pre-Budget report, which are on target, and he reported on public finance figures against our fiscal rules, which are on target.
	No wonder we heard so little from the Tories on the economy in this Budget debate and no wonder the Leader of the Opposition responded to the Chancellor with personal attacks and not criticism of policy—a mistake that the hon. Member for Fareham (Mr.   Hoban) repeated tonight. They have nothing to say of their own on how to reinforce the science, innovation and research base of Britain, how to tackle the threat of climate change—

Bernard Jenkin: Will the Financial Secretary give way?

John Healey: I will later. They have nothing to say on how to make Britain a leader in the development of new energy technologies or how to remove and reduce the scar of child poverty in our country. Many of the contributions tonight did not add much to that. I will give way to the hon. Gentleman, but I will come to the remarks that he made if he and other hon. Members allow me.

Bernard Jenkin: On science, now that those in the civil service Box have had a chance to respond to the speech   of my hon. Friend the Member for Havant (Mr. Willetts), will the Financial Secretary explain what has happened to the manifesto commitment to spend £250 million on new laboratories in schools?

John Healey: If the hon. Gentleman looks at the public finance figures, he will see that, by 2007–08, we will be spending £6.4 billion in capital investment in our schools. A high priority for that investment is science funding and science labs.
	I will talk about the speeches from Front Benchers first. The hon. Member for Brent, East (Sarah Teather) urged us to have a debate on policy priorities and to deal with the hard facts. There is nothing vague, as she put it, about the Chancellor's Budget commitments on education. First, there will be extra cash going directly to all head teachers from next month, with more to come next year. Secondly, there are hard figures on boosting the capital spending from £5.6 billion in our schools this year to £8 billion a year by 2010–11, matching in five years for our state schools the capital spend per pupil currently going into private schools. The hon. Members for Brent, East and for Havant (Mr. Willetts) asked about the new money that will go directly to schools. There will be £220 million in the next financial year and £365 million in the year after that to boost personalised learning. More will go to schools with the greatest need and those with the pupils who are the lowest achievers.
	One of the most important things that the hon. Member for Havant tried to do in his speech was to make clear the Conservatives' approach to the Chancellor's commitment on schools, but we still need clarity. As my right hon. Friend the Secretary of State said, when the shadow Chief Secretary to the Treasury was asked on Budget day about the implication of the third fiscal rule that the Conservatives had, she confirmed that the Tories would spend less on education than the Chancellor set out. When the Conservative Front-Bench spokesman, the hon. Member for Wycombe (Mr. Goodman), was asked during the winding-up speeches in the next day's debate:
	"Does his party support our goal to raise the level of state spending in schools up to the level of private schools",
	he said:
	"Of course we support the goal".—[Official Report, 23 March 2006; Vol. 444, c. 508.]
	I welcomed what the hon. Member for Havant had to say about schools, as far he could. He said cautiously and vaguely that he was happy to sign up to the aspiration. However, just to be clear, will he match the long-term pledge to raise the level of funding for pupils in state schools to that for pupils in private schools? Will he be clear that he will back our immediate commitment to do so on capital spending for schools by 2010–11, or does he maintain the policy of putting tax cuts first?

David Willetts: I thought I had made that clear in my speech, but I will try to give absolute clarity. Yes, we accept the increase in school spending and the capital spending pledge. We need more information about the time scale for the aspiration, although, of course, we support it. For us, the crucial aspiration is to match the standards in private education, not just the spending.

John Healey: We have made progress since Budget day. Clearly the hon. Gentleman has disowned the comments made by his colleague, the shadow Chief Secretary to the Treasury. My right hon. Friend the Secretary of State earlier described the Conservative party's policy changes as flip-flops, and I have to say that she was right. The situation should concern everyone. I guess that there are some people who want to believe what the Leader of the Opposition says and his promises, but, frankly, the fiasco of the policy flip-flops following the Budget shows that when the Tories are put under pressure and the going gets tough, they give in.
	The hon. Member for North Essex (Mr. Jenkin) was right to warn of the challenges in the global economy, just as the Chancellor did in his Budget speech. The hon. Gentleman was also right to say that we need to boost research and development. However, he spoiled his comments by talking about the tax burden. He knows that this Labour Chancellor cut the main rate of corporation tax, the rate of small business corporation tax and the rate of capital gains on business assets. He knows that the tax burden is still lower than it was at its peak under Baroness Thatcher in 1984. He also knows that, according to the OECD, the net direct tax burden for the average working family has halved since the Labour Government came into office.
	Other speeches made by Opposition Members shone little light on the policies that we could expect from a Conservative Government, but let me deal with as many contributions as I can in the time available. The hon. Member for Mid-Worcestershire (Peter Luff) freely admitted that spending on education has gone up under this Government. Whatever position he claims for Worcestershire pupils, they would have been—and would be—far poorer under a Conservative Government than the Labour Government of the moment.
	The hon. Member for West Suffolk (Mr. Spring) was right to raise concerns about regulation, but his overstated rhetoric spoiled his case. The Budget produced specific targets for Her Majesty's Revenue and Customs to reduce administrative costs in the tax system. It also included plans for further simplifications. Similar hard analysis and plans for the other areas of the Government in which he is interested will be published during the rest of this year.
	The hon. Member for Dundee, East (Stewart Hosie) called the Budget thin. He was especially concerned about attracting investment into the UK. Perhaps he could look at the publication "Science and innovation investment framework 2004–2014: next steps", which we published alongside the Budget, and in particular at page 66, which sets out the answer to his concerns. I am glad that he welcomes the Budget publication on consulting on the future of carbon capture and storage.

Stewart Hosie: Will the hon. Gentleman give way?

John Healey: I will not because I want to respond to other hon. Members.
	The hon. Member for Ludlow (Mr. Dunne) spoke with passion from his constituency perspective. I will ensure that my right hon. Friend the Secretary of State for Education and Skills responds to him on his point about further education for his constituents. However, he began by questioning the Chancellor's credibility—the same Chancellor whom Alan Greenspan has described as "without peer" on economic policy making.
	The hon. Gentleman and the hon. Member for Hornchurch (James Brokenshire) criticised the Government on skills. The proportion of 16-year-olds achieving five good GCSEs or better has risen from 45 to 55 per cent. under this Government. Some 1 million adults have improved their literacy or numeracy skills under this Government. The proportion of adults with a degree has increased from one fifth to more than a quarter under this Government.
	My hon. Friend the Member for Huddersfield (Mr. Sheerman), who courteously said that he could not be present for the wind-ups, made an informed and expert contribution as Chair of the Select Committee on Education and Skills. My right hon. Friend the Member for North Tyneside (Mr. Byers) looked forward to the Government's response to the Turner report in a characteristically reflective, and rather broad and sweeping, contribution.
	My hon. Friend the Member for Coventry, South (Mr. Cunningham) set out a long-term concern about pensioners receiving further support, especially those who have been failed by their occupational pension schemes collapsing. My hon. Friend the Member for Burnley (Kitty Ussher) spoke about firms in her constituency and drew on her national policy experience to explain how the Budget announcements may help them.
	My hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) shares the Chancellor's passion for education, even if he does not share every detail of the Government's planned reforms. He told of us lessons in Scotland that could be learned in England. My hon. Friend the Member for Glasgow, North (Ann McKechin) was right about the Budget's theme, which is how Britain can meet the changing pressures in the world, and she was right to point to our contribution on climate change. My hon. Friend the Member for Northampton, North (Ms Keeble) was concerned to see young people in her area share in the greater investment that the Budget makes in sport. I will ensure that the Minister for Sport writes to her with further details so that she can see how that might take place.
	My hon. Friend the Member for Norwich, North (Dr.   Gibson), who is Chair of the Science and Technology Committee, observed that the priority, plans and funding contained in the 10-year framework have never been seen in Britain before. My right hon. Friend the Member for Edinburgh, East (Dr. Strang) recognised the UK as one of the leading countries in dealing with climate change and rightly urged us to use energy more efficiently, not just in business, but in households and the public sector.
	As we enter the 10th year of a Labour Government, this is the 10th consecutive year of uninterrupted economic growth. It is also the 10th successive year that we have grown faster than the euro area. Not only has there been growth in every quarter in every year since 1997, but growth has averaged 2.8 per cent.—a rate that is significantly higher than the average of the period 1979 to 1997, when it was at just 2.1 per cent: a period of government that left Britain seventh out of seven in the G7 for national income per head. Now Britain is second only to America in the G7. Now there are 2.4 million more jobs in the economy. Now there are more than 500,000 more firms in business and 1.7 million more home owners than in 1997, when Labour first came to office.
	The choice at the heart of the Budget debate is whether to cut planned public spending to cut taxes on principle, whatever the needs of the economy, our infrastructure and public services, or whether to invest to meet the long-term challenges that we must face in Britain: investment in science, innovation and skills, investment in tackling the threat of climate change, investment in the long-term infrastructure needs of the economy and, above all, investment in the talent and the potential of every one of our young people. As my right hon. Friend the Chancellor confirmed in the Budget and as my right hon. Friend the Secretary of State for Education and Skills said, education—
	It being Ten o'clock, the debate stood adjourned.
	Debate to be resumed on Tuesday 28 March.

SITTINGS OF THE HOUSE

Ordered,
	That, at the sitting on Wednesday 29th March, the Speaker shall not adjourn the House until any message from the Lords has been received and any Committee to draw up Reasons which has been appointed at that sitting has reported.—[Tony Cunningham.]

COMMUNITY LEGAL SERVICE

Motion made, and Question proposed, That this House do now adjourn.—[Tony Cunningham.]

Keith Vaz: rose— [Interruption.]

Madam Deputy Speaker: Would hon. Members who are leaving the Chamber go quickly and quietly, and would hon. Members who remain here be quiet?

Keith Vaz: I would like to thank you, Madam Deputy Speaker, for allowing me the opportunity to raise on the Floor of the House the future of the Community Legal Service.
	I am delighted that my right hon. and learned Friend the Minister of State, Department for Constitutional Affairs is on the Front Bench, and I welcome her to her new responsibilities. I am also pleased that the right hon. Member for Berwick-upon-Tweed (Mr. Beith), the Chairman of the Select Committee on Constitutional Affairs and other right hon. and hon. Members are in the Chamber. I was delighted when, as a Minister in the former Lord Chancellor's Department, I had the opportunity to attend the launch of the Community Legal Service in April 2000 by the then Lord Chancellor, my right hon. and learned Friend Lord Irvine of Lairg. This Saturday, it will be exactly six years since the establishment of the CLS, and it is important that Parliament should assess the service so far and try to map out its future.
	Last Thursday, after months of consultation on a paper entitled "Making Legal Rights a Reality" the Legal Services Commission, with impeccable timing for our debate, released its strategy document outlining the future of the service between now and 2011. In February, Lord Carter of Coles published his interim report on reforming the procurement of legal aid—we await his final report with great interest. I was pleased that last week on Budget day the Legal Services Commission took the opportunity quietly to inform its contract partners that it will review its decision to terminate funding of the specialist support services after a relaunched consultation is complete. I will refer to that announcement a little later.
	The great post-war Attlee Government identified three requirements for a just society—free state education, free health care, and free access to justice. Although the provision of the last requirement has generally had a lower profile than the first two it is no less important. Protecting the vulnerable and ensuring the legal rights of everyone requires an efficient, effective and co-ordinated legal service. The Legal Services Commission and the CLS were established under the Access to Justice Act 1999. The vision behind the CLS was to ensure that everyone in society has access to justice through quality-assured legal advice, representation, education and information. It is not a single body or organisation—it is defined in terms of its purpose, which is to promote the availability of legal services in civil law, including all the organisations and bodies that fund or provide civil legal advice services, with the Legal Services Commission acting as guardian of the service. Although an exciting concept, its very structure poses serious practical difficulties.
	It is perhaps easier to describe the CLS as a near-equivalent in law of the national health service. Like the NHS, the CLS should allow everyone the opportunity to receive specialist advice according to their need. As in medicine, legal advisers specialise in different fields. Welfare, education, employment rights and family law are just some of the common areas that the service covers. For the client to be best served, he or she should have access to the correct specialists. To continue the medical analogy, one would not go to see a dermatologist about a sore throat.
	I shall raise several issues in the debate. After six years, the challenges and problems that the service faces can be clearly identified. Research from the legal services research centre shows that there are likely to be over a million unsolved legal problems each year, and that only half of those with a legal problem choose to seek legal advice. Of those who do seek guidance, one in seven fail to receive any legal advice. It is also much more likely that if a client is facing one legal problem, they will also experience another related legal issue.
	The main challenges are the funding of the civil legal aid budget, the recruitment and retention of trained lawyers and advisers, the identification of the needs of the public, and the provision of a seamless legal advice service. The funding of the CLS has been identified as the most important concern of those working in the service. In spite of efforts to control spending, the annual legal aid budget has risen from £1.5 billion in 1997–98, to over £2.1 billion last year, a rise of approximately 40 per cent., or a 10 per cent. increase in real terms.
	Despite the rise, practitioners and consumers complain that the sum is not enough to retain good lawyers or to provide a first class service. The £2.1 billion funding has to be shared with the criminal defence service, as well as funding the administration of the Legal Services Commission. In the past seven years, spending on criminal legal aid rose by 37 per cent. in real terms. As funding for civil legal aid is not ring-fenced, that rise has resulted in civil legal aid falling by 13 per cent.
	That has meant increasing pressure on legal advice providers in all areas that the CLS covers, and it is important that before the situation becomes critical, funding of the civil legal aid budget is put on a more sustainable and secure footing. This is a call not for unrestrained spending—obviously, there is a limit to the amount that can be spent—but to take forward proposals that can reduce pressure on the service.
	Lord Carter seeks to provide a solution to the problems of funding legal aid. His recommendations include cutting the bureaucracy of the Legal Services Commission, and bringing in a market-based system for legal aid allocation and fixed-rate fees for certain types of cases. These proposals should be studied carefully. However, should the number of cases requiring criminal legal aid continue to rise, there will be a corresponding fall in the proportion of the budget allocated for the CLS.
	Unfortunately, Lord Carter did not put the recruitment and retention of current legal aid practitioners in the terms of reference of his report. The circumstances that the CLS faces in its efforts to provide legal advice have been well reported. It is a common sentiment of those working in legal aid that the system is facing a crisis, as more lawyers leave the service and fail to be replaced by younger newly qualified practitioners. Kevin Martin, president of the Law Society, has used such words as "meltdown" and "disaster".
	The implications for a member of the public wishing to receive specialist legal advice can already be seen. What are known as advice deserts are becoming more common. These deserts are areas in which few or no legal aid solicitor is available. For example, the town of Leatherhead has not one single legal aid solicitor, and in the whole of Kent there are no legal aid solicitors offering housing advice. This puts advice organisations such as the National Association of Citizens Advice Bureaux in an impossible situation.
	One bureau in the west midlands tried to advise a man whose ex-wife's new partner was in breach of a court order concerning access to the client's children. The client had a very real concern that his children were at risk from his ex-wife's partner, but the bureau was unable to find a community legal service solicitor within a 15-mile radius to help process an injunction. There are thousands of similar cases.
	We must be clear that the failure to retain or recruit new solicitors for legal aid work is not the fault of those solicitors. It is not the case that these practitioners wish to work only on cases that pay well. Many newly qualified solicitors are likely to emerge in the legal world burdened with debt. After seven years of study, many students graduate holding loans of over £20,000. A solicitor with a sense of social justice who practises wholly in legal aid is likely to earn less than a new recruit to the Metropolitan police. They must start paying back their debt and look to secure their future, but the amount that they would get paid under legal aid does not allow them to do so. We must wait for the final version of Lord Carter's report. I hope that it contains proposals on fixed-fee cases that are sufficiently attractive to halt or even reverse the decline in the number of legal aid solicitors.
	At the moment, two different services are attempting to cover the gaps in service left by those advice deserts. The specialist support service was created with organisations such as Shelter and the Child Poverty Action Group, and it includes people who have the relevant expertise to help those with problems in areas such as housing and family law. The tiny amount of £2.9 million a year is spent on the specialist support service, but, as my hon. Friends know, until last week the LSC had decided to terminate its funding. Last Wednesday, the LSC reversed that decision, and it will start a new consultation process, and I hope that the service and the consultation process will be improved. I welcome that U-turn and pay tribute to my hon. Friend the Member for Cardiff, North (Julie Morgan), who led the campaign to get the LSC to reconsider its decision.

Julie Morgan: I thank my hon. Friend for giving way and initiating this important debate. I know that he is as pleased as I am that the LSC has reversed its decision on the specialist support service following the Constitutional Affairs Committee report. Does he think that that threat to the specialist support service showed the LSC's lack of understanding of the complex nature of the legal advice that is required? Citizens advice bureaux, other voluntary organisations and CLS direct need the back-up of the experts at the specialist support service to ensure that some of the most vulnerable people receive high quality legal advice.

Keith Vaz: My hon. Friend is right. As I have said, I believe that her leadership of the campaign resulted in the change. It is vital that we have a good consultation process, because if the consultation is good, the case will be made to keep the service going.
	The second service that was meant to relieve pressure on the Community Legal Service is CLS Direct, which is a telephone and internet service that members of the public approach directly. In some cases, an individual will have a query that can be answered without the need to see a solicitor. Last year, more than 210,000 calls were made to the telephone service, with more than 500,000 visitors to the website. This afternoon, my office phoned CLS Direct on behalf of Mrs. Valerie Volpi, who has suffered a fall, to see where and how she could seek guidance. After two attempts, we got through the automated system and managed to speak to a human being. We were told that unfortunately it could offer advice only on debt, housing and welfare benefits, but that it could provide Mrs. Volpi with the telephone number for her local CAB.
	The system is too bureaucratic. I have used the website and found it to be satisfactory in the way in which it provides explanations of basic points of law. With improvements, CLS Direct could be a very useful service, although there needs to be a campaign to raise awareness of its existence. I was very disappointed to find at a recent Select Committee meeting under the chairmanship of the right hon. Member for Berwick-upon-Tweed that the acting chief executive of the LSC was unable to recall the number of the service, which is, for the benefit of the House, 0845 3454345. Although those services complement the work of the CLS, they cannot form a mainstream option for the provision of legal advice, because they will not be able to cope if the number of legal aid solicitors continues to decrease.
	The final area in which the CLS is under challenge concerns the clustering of legal problems. A survey showed that 46 per cent. of all respondents with justice problems reported two or more problems, of whom 47 per cent. reported three or more problems. Clustering can best be understood as a domino effect resulting from an initial legal aid problem. For example, a mother suffering from domestic violence due to her situation has a greater chance of becoming homeless, suffering poverty or experiencing other issues of family law. Of course, the longer it takes to deal with the initial situation, the more chance there is of its entering into other areas of civil, even criminal, law, requiring greater specialist knowledge, greater expense and the involvement of other authorities. Alternatively, situations can arise that immediately relate to several areas of law. It is incumbent on the Legal Services Commission to formulate a strategy that can quickly identify and deal with such cases to ensure a seamless service. That requires an holistic approach that has not yet been answered by the current network of CLS partnerships.
	In the five-year plan for the CLS that has just been published, the LSC informs us that it will abandon those partnerships and look towards the establishment and use of community legal and advice centres, which are intended to bring together specialists from a variety of legal fields to create a one-stop shop for legal advice.

David Taylor: I understand that 12 of those centres are likely to be set up, including one in our own city of Leicester. Does my hon. Friend share my optimism about how they might operate, drawing on his distinguished service in the Belgrave law centre before he became an MP? Is he as happy as I am about the need to roll them out into the deserts that he mentioned? I am not sure that Leicester is necessarily one of those, but I am sure that it is a good place in which to pilot because of the multiple groupings of problems.

Keith Vaz: I thank my hon. Friend for that intervention. He is absolutely right. Leicester is a great place to pilot the new scheme. I am sure that that has nothing to do with the fact that I have secured this debate. One of the CLS's senior officials, the director of children's services, has said that it has had more pilots than British Airways. It is extremely important that we look carefully at the situation to assess whether the pilots are successful, but I am glad that they are coming to Leicester.
	I seek an assurance from the Minister that there is no question of the funding for the Law Centres Federation being removed. She comes from a long and distinguished tradition of involvement in this movement, and I would be very sad if she, of all Ministers, decided that this was the time to take away funding from Citizens Advice or from the Law Centres Federation.
	Civil legal aid is usually overshadowed by the criminal legal aid branch. However, the CLS fulfils a vital role in ensuring a just and equitable society. For the clients involved, civil justice problems can have a devastating impact on their life. It is extremely important that we proceed to map out a very careful plan for the CLS. The Department for Constitutional Affairs, under the current Lord Chancellor, my right hon. and learned Friend Lord Falconer of Thoroton, and an excellent team of Ministers, has modernised our legal process beyond recognition, and that will be one of the true legacies of this Labour Government. However, it should not take away the intrinsic elements that have made our legal system the envy of the world.

Harriet Harman: I thank my hon. Friend for choosing the important issue of legal aid as the subject of this debate. I congratulate him on his speech, which I will draw to the attention of Lord Carter and which will of course be studied by the Legal Services Commission as well as by other hon. Members.
	I thank my hon. Friend for the warmth of the welcome that he gave me in my new portfolio of responsibilities. I particularly value it as it comes from him, as he has done so much in this House since 1987 consistently to raise the issues of access to justice and the vital part that good quality legal services play in that. I hope that he will bear with me, as I took over this portfolio of responsibilities only last week.
	Like my hon. Friend, I am in politics because I want to be part of the effort to tackle poverty and social exclusion. Like him, I represent a constituency where there are still problems of social exclusion. Like him, I regard it as important to ensure that my constituents have not only good schools and hospitals and a job, but their legal rights. We have tried—indeed, he has been part of trying—to make the law fairer. We have brought in laws that make things fairer for tenants, for employees, and for people who face discrimination. However, like him, I believe that there is only any point in those laws—and all other laws that exist to make society fairer—if everyone has access to good legal advice and the law is accessible to all. That has been our concern since we came into government in 1997.
	I acknowledge that, as my hon. Friend said, a great deal of unmet legal need continues to exist. Our concern about that was the basis of our introducing the Community Legal Service. Since then, I hope that there have not been too many legal initiatives, but several projects have tried to improve the quality of legal advice and assistance and get it to those who need it most. My hon. Friend mentioned CLS Direct. He is right that, as yet, it deals only with debt, housing and welfare benefits, but it already provides advice to 2,000 people a week. Many of those would not get legal advice in any other way. That applies especially to young people, who want to get advice and information on the internet. However, I agree with my hon. Friend that the service needs further publicity.
	We are also finding new ways to provide legal services so that, for example, we take them to where people are. That includes providing them at county court, where people face, for example, actions for housing possession, instead of expecting them to go to the lawyer's office. That helps 400 people a week throughout the country. My hon. Friend rightly said that we need a seamless service instead of making people go from pillar to post. That lies behind the one-stop shop service in Leicester that he and my hon. Friend the Member for North-West Leicestershire (David Taylor) mentioned.
	The number of people helped with legal advice for civil matters is 20 per cent. higher than last year, especially with housing, mental health, debt and benefit problems. However, I am not here to tell hon. Members that all is rosy. We know that there is more to be done and that there are problems to tackle. The Select Committee on Constitutional Affairs highlighted those.
	One of the problems is that less money is spent on legal aid for family and civil cases now than in 1997. As my hon. Friend the Member for Leicester, East said, the overall legal aid budget has increased from £1.5 billion in 1997 to £2.1 billion this year. However, that increase has been taken up with extra spending on criminal legal aid, which has increased from £734 million in 1997 to £1.169 billion this year. That is a 37 per cent. real increase against a background of a fall in the number of criminal cases.
	However, the amount spent on civil and family legal aid has gone down from £755 million in 1997 to £722 million, which, when one takes inflation into account, is the equivalent of a £200 million—or 22 per cent.—real terms cut. That is one of the reasons why we have asked Lord Carter, to whom we are grateful, to review legal aid services. We are not simply waiting for his final report. We have already introduced the Criminal Defence Service Bill and tighter controls on the high cost criminal cases.
	Our aim is to have a properly funded criminal legal aid system and to ensure that the civil and family system gets a larger share of the overall legal aid budget. My hon. Friend raised the important issue of specialist support services. He rightly paid tribute to my hon. Friend the Member for Cardiff, North (Julie Morgan), who raised the matter not only in the Select Committee but in the Lobby with me on several occasions. She actively pressed that important point and I can confirm that the Legal Services Commission has committed itself to continuing to fund specialist support services while it undertakes a proper consultation on the future.
	I shall, of course, ensure that I keep the House regularly updated on the progress towards our shared objectives and I look forward to working with my hon. Friend the Member for Leicester, East, the Chairman and other members of the Select Committee, and many others who are interested in that important issue.
	Question put and agreed to.
	Adjourned accordingly at twenty-four minutes past Ten o'clock.